Industry’s most respected emerging semiconductor companies drive growth in turbulent times

USA: The most recent wave of economic woes and rising consumer pessimism has impacted the global electronics sector to the point where many analysts have cut semiconductor revenue forecasts for 2011. While it can prove to be nearly impossible to predict whether the economy will begin to stabilize or continue to decline, emerging semiconductor companies have positioned themselves to become the primary drivers of what has recently been deemed a tepid industry.

Each year, GSA recognizes the industry’s most respected emerging public semiconductor companies at its Annual Awards Dinner Celebration held in Santa Clara, California. In September, industry peers, suppliers, customers and pundits were asked to cast a vote for the emerging public semiconductor company they most respect in terms of vision, strategy, execution and future opportunity. The following article analyzes the financial status of the top 15 voted emerging companies, including the top three nominees Cavium, NetLogic Microsystems and Silicon Laboratories.

Cavium Inc., a provider of highly integrated semiconductor products that enable intelligent processing for networking, communications and the digital home, saw Q3’11 revenues consistent with reduced financial outlooks released in September. Though weaker than desired, Syed Ali, president and CEO of Cavium, stated: “We continued to experience high levels of design win activity across multiple product families and we are confident that we are well positioned for the future.” While revenue decreased 5.4 percent quarter-over-quarter (QoQ), Cavium experienced 22.7 percent year-over-year (YoY) revenue growth in Q3 and expects revenue to increase between 18 percent and 20 percent in Q4 over the prior quarter.

NetLogic Microsystems Inc., a provider of high-performance semiconductor solutions for next-generation Internet networks, reported Q3’11 revenue of $106.8 million, an increase of 3 percent QoQ and 6.8 percent YoY. Netlogic’s growth is expected to continue as Stifel Nicolaus & Company estimates the company’s Q4’11 revenue to reach $110 million.

Silicon Laboratories Inc., a supplier of high-performance, mixed-signal ICs, recorded Q3’11 revenue of $119.1 million, a decrease of 5.6 percent QoQ and 0.9 percent YoY. Although revenues were affected by weakening demands across end markets, Necip Sayiner, president and CEO of Silicon Laboratories, stated, "I'm optimistic about the traction we’re getting with new products and believe that with the improved complexion of our business and continued focus on market share gains, we'll benefit disproportionately when the market environment improves." Silicon Labs is estimating Q4’11 revenue to reach $120 million.

The top 15 voted emerging companies’ Q3’11 revenue totaled $1.4 billion, an increase of 2.7 percent over Q2’11. In the last few weeks, industry pundits have reported actual and estimated Q3 revenue growth in the range of mid 3 percent to high 4 percent over Q2. Of the top 15 voted emerging companies, seven exceeded this percentage range and three posted double digit QoQ growth (Dialog Semiconductor, Spreadtrum Communications and Silicon Image.

Germany-based Dialog Semiconductor led all emerging semiconductor companies with 21.1 percent and 76.9 percent QoQ and YoY growths, respectively, in Q3’11. According to their press release, Dialog’s record revenues were driven by the continued ramp of the smartphone and tablet PC markets, as well as continued design wins for companion power management ICs (PMICs) with Dialog’s application processor partners. Dialog forecasts that positive revenue momentum will continue in Q4’11 and expects revenue to be in the range of $150-$157 million.

Chinese fabless semiconductor provider Spreadtrum Communications recorded the second highest emerging company quarterly revenue growth when it posted a 15.4 percent increase QoQ. It also posted the largest YoY revenue growth among the top 15 voted emerging semiconductor companies at 92 percent. Spreadtrum’s Q3 revenue totaled $184.8 million, exceeding the previously guided range of $172-$178 million. The company expects Q4’11 revenue to reach $188 million.

California-based Silicon Image recorded the third highest emerging company quarterly revenue growth when it posted an 11.5 percent increase QoQ. Silicon Image attributes their revenue growth to the fact that their mobile and intellectual property (IP) business continues to grow as the HDMI and Mobile High-Definition Link (MHL) standards continue to expand. Silicon Image’s Q4’11 revenues are expected to be between $65-$72 million.

Other top emerging semiconductor companies expecting to report Q3’11 financial results within the next few weeks include Richtek Technology Corp. and Sigma Designs Inc.