Semtech Finds Shift From Defense Paying Off

As was the case for many Ventura County companies, the early 1990s were a period of transition for the nearly 40-year-old Semtech Corp.

It was during that time that the Newbury Park-based manufacturer of semiconductor parts shifted its focus from the declining military market to the commercial arena.

As the end of the decade approaches, the decision seems to be paying steady dividends, with Semtech reporting sizable gains in sales and net income for the second quarter of fiscal 1998.

Semtech reported sales of $21.6 million for the period ended Aug. 3, a 61% increase over $13.4 million for the same period in fiscal 1997. Net income for the second quarter of fiscal 1998 was $3.2 million, a $156% climb from the $1.2 million reported a year earlier.

Revenues for the second quarter increased 6% over the first quarter of fiscal ‘98, with net income increasing 12%.

David Franz, chief financial officer of Semtech, credited the company’s financial success to the growing popularity of its two main lines--voltage suppression devices and power management products.

“These were central to our strategy of converting from military to commercial focus,” Franz said.

“We now have a very strong position of providing power-management solutions to the PC market and providing electrostatic protection for the communications marketplace,” he said. “Especially in the area of protection, Semtech was very early to spot some of the needs of the commercial marketplace for these types of products.”

Semtech’s power management products--or voltage regulators--allow an electrical system to be converted to a lower voltage. The suppressors protect electrical circuits from being harmed by outside power sources.

“We have a [voltage suppressor] product which protects cellular base stations against lightning strikes,” Franz said.

“The circuit will turn on and absorb very high voltage and protect some of the more sensitive circuitry. And as electronics proliferate, you also have more and more susceptibility to electric static, and that has also been driving this trend.”