June 17, 2008

Teridian Recognized for Satellite Set-Top Box Chips

By Tolkoff, Sarah

In-Stat Research Shows Demand for High-End Electronics Growing; STEC Hires WilmerHale TECHNOLOGY

Irvine chipmaker Teridian Semiconductor Corp. has the best chips that go into satellite set-top boxes-at least for this year.

Global consultant Frost & Sullivan recognized Teridian as the emerging company of the year for the chip making category.

The privately held company has about 75 workers here. It doesn't disclose sales-the Business Journal estimates it did roughly $150 million last year.

Teridian makes what's known as mixed-signal chips, which convert analog signals into digital ones so they can communicate with processor chips-the brains of a device.

It sells what are called "conditional access" chips to satellite TV providers, such as DirecTV Group Inc., which put them into set- top boxes. The cards allow customers to access extra channels, games or pay-per-view shows. They are big in Japan and China, according to Steve McClure, general manager at Teridian.

The company works closely with Irvine chipmaker Broadcom Corp., which makes processors for set-top boxes.

"The kind of components we have are very innovative," McClure said. "To some degree they are not the rock star components, like Broadcom's processors. But there is still a lot of innovation that goes into the peripheral chips."

Teridian also makes chips that run smartcard readers, which are used in cash register terminals, electronic banking devices that hook up to a home computer and prepaid electricity meters.

The chipmaker is working with big utility companies to develop "smart metering" programs, which charge different rates for electricity depending on the time of day it's used.

It also makes controller chips for Ethernet networks that help speed the flow of streaming video, audio or voice files.

Electronics Demand

Despite concerns about consumer spending, demand for high-end (read: digital) consumer electronics is set to grow through 2011, according to Scottsdale-based market tracker In-Stat.

China, India and South Korea are driving the growth, said Brian O'Rourke, principal analyst at In-Stat.

"A big part of it is the emerging middle class in China and India," he said. "If just a few percent of their population enters the middle class, that's still a huge number."

Shipments of PCs, computer accessories, cell phones and traditional consumer electronics gear such as TVs are set to grow from 2.7 billion units in 2007 to 3. 1 billion in 201 1 , In-Stat's research showed.

PCs are set to grow roughly 10% a year through 2011 because of increased sales in Africa, the Middle East, South America and Asia, O'Rourke said.

Laptops will continue to outsell desktops, he said.

Cell phones, the most numerous consumer devices in the world, are set to continue to be sold at a rapid clip.

Consumers in India and China are likely to be the biggest buyers of cell phones as "low-cost handsets have been developed to meet the market requirements in less developed countries," O'Rourke said.

That's good news for a slew of local tech companies that make chips, software and other parts and sell them to cell phone makers, including Broadcom, Irvine's Microsemi Corp., Aliso Viejo-based startup Networks In Motion Inc., Aliso Viejo's Smith Micro Software Inc. and Anaheim's Multi-Fineline Electronix Inc., among others.

Hiring Help

Santa Ana's STEC Inc., a maker of flash memory-based drives for industrial uses, said it's retained Los Angeles-based law firm Wilmer Cutler Pickering Hale and Dorr LLP to fight a patent suit brought by Seagate Technology LLC.

Last month, Scotts Valley-based Seagate filed a suit that claimed STEC violated four patents it registered between 2002 and 2006.

STEC makes flash memory drives that industry insiders refer to as "solid state" because they have no moving parts. They typically are smaller, more durable and require less electricity to power up and operate.

Seagate is the No. 1 maker of traditional disk drives, which have spinning disks called platters, a needle-like reader and other chips and connecting parts.

It competes directly with Lake Forest-based rival Western Digital Corp., the No. 2 disk drive maker.

STEC is an indirect rival because it has a corner on the market selling solid state drives for use in storage networks by large corporations and the military.

WilmerHale, as the firm is known, specializes in technology and intellectual property litigation.

It's the same firm that represented Broadcom in a long-running series of patent disputes with San Diego-based rival Qualcomm Inc.

WilmerHale has represented Broadcom in three separate cases in Santa Ana and San Diego courts-and won.

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