Prospects Are Promising for Semiconductor Maker Semtech

The Semtech building here is dwarfed by one of Ventura County’s largest employers, the mammoth Amgen complex sprawled across the street. But if things keep going the way they are, the semiconductor company may have to pack up and move in search of stretching room of its own.

The only Ventura County company to be named one of the 200 best small businesses in the country by Forbes magazine last week, Semtech Corp. is on something of a roll.

Semtech was ranked 81st on the list by Forbes editors, who based their choices on a formula including a company’s earnings growth, returns on equity and sales growth.

The manufacturer has inched itself into the lucrative communications fiber-optics market, in part by acquiring Practical Sciences Inc., an Oxnard-based component design firm.

Practical Sciences is known primarily for designing data-recovery devices used for high-speed communications.

Semtech’s sales for the past fiscal year totaled $114.5 million, an 11% increase over the previous year and a 60% increase from the year before. In portions of its niche market, Semtech is the name to know.

It just goes to show that you can teach an old dog new tricks.

And Semtech, at nearly 40 years old, is virtually an ancient dog in the world of technology. Based in this Thousand Oaks neighborhood before Thousand Oaks was even a city, the company mainly contracted with the military for most of its history.

“We were the leading [private] employer in the county at one point with about 1,000 people,” said David Franz, the company’s chief financial officer. But “at the fall of the Berlin Wall, we saw the writing on the wall.”

Time and the end of the Cold War took their toll, and the company realized it had to seek its fortune elsewhere.

So Semtech, although comfortable for years making power-surge protectors for the military, turned its eye toward the commercial sector and discovered a new way of business, one that has seen the company grow steadily in the past year or two and seems to promise further growth.

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“We changed the whole business,” said Jack Poe, the company’s chief executive. “We discovered the fastest-growing segments, and that’s where we concentrated our resources.”

The change hasn’t been seamless. In 1996, the company trimmed its staff by 20%, and last year’s sales slumped for a while in response to the Asian economic crisis.

Although still behind competitor Vitesse Semiconductor Corp. of Camarillo in sales, Semtech is now a 39-year-old up-and-comer. The company creates components for PCs and test equipment--and is making a major push into the communications world, where its analog conductors are vital for cell phones.

“You don’t need to be a sage to see that these areas are going to grow,” said Stewart Kelly, the director of the unit dealing with communication technology.

It’s a smart move, but not one without peril, analysts said.

“Analog and mixed-signal semiconductors are one of the hottest things going,” said Rob Lineback, the Dallas-based editor-in-chief of Semiconductor Business News. “The biggest problem they’ll face is that the big companies are coming in.”

The other problems are those facing the entire industry and many other Ventura County business: Where do they find competent employees?

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Unlike other companies, Semtech goes to them. Of the company’s 600 employees, only 200 work in the company’s Newbury Park offices--the rest are scattered in areas such as the Silicon Valley, Texas and England, where the company keeps manufacturing plants.

“People don’t want to relocate here. There aren’t any options for them,” said Poe, of the company’s slow-growth Ventura County home base, as compared to somewhere like Silicon Valley. “It doesn’t make sense to build up in the county. The infrastructure’s not here to support it.”

In the meantime, the company is at home in Newbury Park, even if it’s bursting its building’s seams and overflowing the parking lot.

Semtech thinks the best is still to come.

“Even though we’re already over 35 years old, there’s a tremendous amount to be written in the next 10 years,” Franz said.

* NEW LOCATION

Raypak, which makes spa and pool heaters, is moving to Oxnard. B6

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