BY ANDREA SIEDSMA
Companies on the forefront of technology generally invest during downturns in the market because when the upturns come they can seize the opportunities. At least that’s Ed Brown’s M.O.
Brown is president of San Diego-based Cymer Inc., which supplies excimer light sources in the deep ultraviolet spectrum that are used in the photolithography process in semiconductor manufacturing.
Just about every modern electronic device , from cell phones to PDAs to PCs and iPods , includes chips manufactured using Cymer’s light source.
Due to the growing demand for high-performance chips, Cymer’s business continues to soar. The company grew 43 percent last year, according to Brown, and plans to add about 200 employees nationwide in 2008 (about 160 in San Diego).
“We have new technology that we are developing that we have already accepted orders for, and we have to deliver by year’s end,” Brown said. “We will also be in a mode where we will increase our R & D; spending (in 2008).”
In January, Cymer, which was launched 22 years ago, expects to complete the construction of its new, 50,000-square-foot expansion in Rancho Bernardo. The facility will partly be used to manufacture Cymer’s new extreme ultraviolet light source, which will be driving chips starting in 2010.
Brown said business for companies like Cymer will depend more and more on consumer demand and spending. He said although some electronics companies have experienced flat growth during the last couple of years, 2008 may prove to be a good year for some.
“If consumer spending is positive during the (2007) holidays, you will see more companies enter into new markets,” he said. “If consumer spending is flat it could cause people to slow their capital investments. But I’m optimistic. I’m telling everyone to buy their kids iPods.”
For Gioia Messinger, founder and CEO of San Diego-based Avaak Inc., the timing couldn’t be better for the growth of her company.
Founded in 2004, Avaak develops ultra-low power integrated wireless video sensor platforms that use digital imaging and other sensors to provide real-time video networks. The company increased its staff by 50 percent in 2007. Avaak, which now has 20 employees, will double that again in 2008, Messinger said.
The company’s technology, which was primarily developed for the defense market, is now also being developed for the consumer market.
Due to this shift, Avaak plans to increase its R & D;, sales and marketing, and operations budgets in 2008, Messinger said (although she did not give exact figures).
Out Of Orbit
Avaak’s growth in 2008 and beyond will be fueled by the increasing popularity for high quality streaming video, from popular Internet sites like YouTube to the various video and imaging sits on the Web, Messinger said.
She believes the San Diego wireless industry in the next few years will begin to break away from the Qualcomm mold as technologies like Avaak’s become more popular.
“A lot of the San Diego tech industry has been focused on the cellular business,” she said. “Now you’re seeing potential diversification away from being Qualcomm-centric to more distributed type of wireless technologies that have to do with moving data from one place to another efficiently. There are many opportunities in video networks and social networks. We are a new breed of companies. I look forward to a prosperous 2008.”
Not all tech firms will be so lucky, however. One of the many challenges local companies will face in 2008 will be access to capital.
So says Rory Moore, director and CEO of CommNexus San Diego, a communications industry trade organization. Although San Diego is home to a handful of solid venture capital firms, many local tech entrepreneurs still have to go out of town to get the capital they need, Moore said.
Silicon Valley’s Pull
“San Diego companies also have to compete against the companies that are in the back yard of the Silicon Valley VCs,” he said.
Recruiting talent will also continue to be a struggle for tech firms, he said.
“Getting someone to relocate to San Diego is very hard,” Moore said. “It’s hard to get people to leave an area where they are comfortable and have a huge network. An engineer recently told me, ‘If I leave the Valley I’ll never get back.’ He said he wouldn’t be able to go back to buy a home and he’ll lose his contacts there for new jobs and opportunities.”
To help ease the talent crunch, Moore said local universities such as UC San Diego and San Diego State University are getting better at churning out top engineering and technical talent, as well as strong business majors.
That will continue to be a strong factor in San Diego’s continued high-tech success, he said.
Despite some challenges, Kevin Carroll, executive director of the local AeA, formerly the American Electronics Association, chapter, predicts that overall, business for San Diego’s technology companies will be about the same in 2008 as it was in 2007.
“One of the reasons is we have so many small and medium-sized companies that we’re usually able to ride roller-coaster cycles,” he said. “If one sector is down we have another sector that is up. We saw that during the 2001 telecom downturn. During that time, other sectors in the economy were able to separate San Diego from the major economic disruptions we saw in other regions.”
Andrea Siedsma is a freelance writer based in Encinitas.