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Outside the Chips & Technologies plant in Milpitas.

1 .

The growth of Chips & Technologies

On a laboratory workbench at Chips and Technologies in Milpitas stands a 2-foot-high electronic mess: a jungle of wires, Circuit boards and morę than 20() Computer chips.

This pile represents the supporting cast of semiconductors used to operate a complex microprocessor chip. But the odd assortment really isn’t necessary any longer. Using advanced semicon-ductor technology and sophisticated Computer design techniques, Chips and Technologies can electronically shrink this mess of circuitry into just eight chips, each about the size of an Austra-lian five cent piece.

The process is an example of what’s known as “integration”, and 2-year-old Chips and Technologies has used this technique to great advantage. In doing so, it has become one of the chip indus-try’s most energetic and best perform-ers.

At a time when big chip makers are still struggling with a proionged reces-sion, Chips and Technologies has turned in an inspired performance Sales and earnings have soared, the company suc-cessfully madę its initial public offering of stock, and one Wall Street analyst has touted the firm as “blazing a trail for a new breed of semiconductor com-panies”.

Like Chips and Technologies, morę and morę firms will be trying to hitch their wagon to integration in years to come. The process might seem trivial to outsiders. After all, as long as a Computer gets the job done, what does it matter how many chips or Circuit boards make up the innards? But to system houses it matters a great deal, and that’s the point Chips and Technologies has seized upon so successfully.

In its fiscal year ended last June, sales totalled $12.7 million, this year, indus-try analysts estimate sales will grow morę than fivefold, to about $70 million. The company, which has 100 em-ployees, has posted a pre-tax return on sales of 36 percent.

So far, two products have accounted for Chips and Technologies* success.

C& T chairman and president Gordon Campbell, who founded the company two years ago.

One is a set of logie chips used in so-called “clone** personal computers that are compatible with IBM’s PC/AT model. Tlie other is a set of graphics chips that enhance the performance of IBM and IBM-compatible personal computers.

The logie chips are a good example of the approach to integration that Chips and Technologies is pursuing. A five-chip set the company introduced re-cently allows Computer makers to re-place 67 of the 94 components found on the main circuit board of an IBM AT.

Chips and Technologies’ strategy is to design and market its products but to avoid committing itself to a costly manufacturing plant. Instead, it relies on subcontractors — mostly in the Far East but induding National Semiconductor of Santa Clara — to produce its chips.

“We’ve got to keep this company as lean as we can**, says chairman and

CH»S *-4    MC president Gordon Campbell. The 42-year-old executive departed San Jose semiconductor maker Seeq Technology in 1984, following a bitter dispute with the firm*s board of directors.

Much of this new company’s success lies in a custom-built computer-aided design and engineering system. It lets Chips and Technologies* engineers design high-density chips in a relatively short time and with a high probability that the designs will work the first time, Campbell says.

Analysts say Chips and Technologies jumped off to such a strong start that it has nearly a year*s lead over a number of smaller firms, as well as big chip firms such as Intel of Santa Clara. Ironi-cally, much of Chips and Technologies* product linę supports Intel microproces-sors, and Intel admits it missed the boat on supplying those parts itself. “Intel left a window open,** Intel Chairman Gordon Moore said recently.

Miliard finds buyer for his Computerland holdings

William Miliard has found a buyer for his Computerland Computer retail chain, in which he Controls 75% of the stock. Miliard has sold his holding to a group of New York-based investors, headed by E M. Warburg Pincus & Co.

The financial terms of the deal were not announced, but one insider said he valued the transaction at around $US250 million. That would represent a far smaller amount than the estimated $US1 billion Miliard had reportedly sought when he first announced his in-tention of selling his Computerland

ELECTRONICS Australia. September 1987