Vitesse Semiconductor Corp. said it has won back many of the designs it lost to competitors because of capacity constraints, and has 25 new products in the pipeline which it expects will maintain the double-digit growth it has enjoyed during the last few quarters.
Camarillo, Calif.-based Vitesse said today that it will continue to expand its communication business and projected a compounded annual growth rate for the unit of well above 50%. Annual growth for the company's test division, meanwhile, will most likely slow to about 30% in the next few quarters.
"We're not looking for dramatic growth in the ATE [automated test equipment] unit," said Louis Tomasetta, president and chief executive of Vitesse during the BancBoston Robertson Stephens Semiconductor Conference in San Francisco today. "We are focusing on the communication sector because it's got the growth and end customer demand."
Vitesse, a gallium-arsenide chip specialist, intensified efforts at establishing a stronger presence in the fast-growing communication sector last May when it acquired Santa Clara, Calif.-based XaQti Corp. for $65 million. The transaction will help Vitesse gain quick entry into the high-end specialty packet-processing and media-access controller chip markets, analysts said.
Today's announcement confirmed expectations on Wall Street that Vitesse would move to limit its exposure to low-growth markets and devote more resources to gaining a firmer position in the communication sector.
Like many other chip makers which own their own fabrication plants, Vitesse said its Camarillo fab is operating at full capacity, while capacity utilization at its Colorado Springs, Colo., facility is increasing and stands at about 60%. This should help push Vitesse bring gross margins up to the company's target of 65% in fiscal 2000, Tomasetta said.
The company, however, is not planning any major investments in additional fabs. "Any investment on the fab side will be minimal," Tomasetta said. "Most of our investments will be back-end stuff."