• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Slimmer TDK semiconductor moves to Irvine Spectrum

Posted on: Thursday, 4 September 2003, 06:00 CDT

TDK Semiconductor Corp., a U.S.-based unit of Japanese electronics maker TDK Corp., has moved its headquarters from Tustin to a smaller Irvine Spectrum space.

The move comes after the chipmaker shuttered its production and test operations and shifted work to Asian contractors.

TDK Semiconductor cut 35 to 40 jobs in the process. It now has about 115 workers.

"We moved all our production and final test functions," said Jerry Fitch, TDK Semiconductor's chief financial officer. "It's a pretty efficient model. We get better execution out of it."

TDK Semiconductor's decision to outsource its production to Asia is symptomatic of a technology industry trend.

TDK's new Irvine digs: 34,000 square feet of space is smaller than old Tustin site

Several Orange County companies have moved big parts of their production operations overseas, including Fountain Valley's Kingston Technology Co. and Newport Beach's Conexant Systems Inc. Companies hope to capitalize on cheap, skilled labor abroad to cut costs.

At 34,000 square feet, TDK's new facility at 6400 Oak Canyon in Irvine is smaller than the 50,000 square feet it occupied on Michelle Drive in Tustin.

"It's a brand-new building," said Fitch. "From a morale standpoint, it's a big help."

The move and job cuts have been the biggest news to come out of TDK Semiconductor for a while.

For the past several years, the company, which makes chips for networking gear and digital cable and satellite set-top boxes, has talked up plans for an initial public offering. Officials originally had slated an offering for 2002.

In 2001, the company had gone so far as to pick two investment banks to lead the offering but has since pulled back.

TDK Semiconductor is betting the market-still down on chipmakers- will be receptive to an offering at some point, though the timetable is up in the air.

"I still think the market for semiconductor IPOs isn't there," Fitch said. "You have to see more demand across the board."

The company plans to offer 20% of its shares to the public, with parent TDK retaining a majority stake.

TDK Semiconductor hopes going public will help lure engineers seeking stock options.

Company officials say they've had some difficulty in the past competing for talent with OC's other public chipmakers.

The offering, which some say could fetch as much as $100 million, also would give the company ammunition to make more acquisitions.

TDK Semiconductor's business is getting better.

"Our markets are seeing increased demand," Fitch said. "Our customers are ordering farther out, which certainly makes it better for us."

The company is looking up on other fronts.

The chipmaker recently settled a long patent dispute with Austin, Texas-based Silicon Laboratories Inc. for $17 million.

"Seventeen million dollars in the bank always helps," Fitch said. "That's a sizeable settlement."

The case was to be tried this November-more than two years after TDK Semiconductor's initial complaint was filed and a year past the original trial date.

At issue were a couple of Silicon Laboratories' direct access arrangement chips.

TDK Semiconductor claimed the chips infringe on its patented technology for a method of transmitting signals across a silicon chip using capacitors, an electronic component that stores memory.

The method is commonly used in modems.

While TDK Semiconductor executives haven't commented on the cost of the suit, publicly-held Silicon Labs said in a filing with the Securities and Exchange Commission before the case was settled: "This lawsuit has involved, and may continue to involve, significant expense and may also divert management's time and attention from other aspects of the company's business."

Under the terms of the settlement, TDK Semiconductor agreed to release all claims covered by the lawsuit.

In addition, the chipmaker gave Silicon Laboratories irrevocable, royalty free licenses for the patent covered by the lawsuit and certain other related patents.

Copyright CBJ, L. P. Aug 11-Aug 17, 2003

More News in this Category