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North Bay Business Journal

Monday, May 23, 2005, 3:00 am

Tech startups fill the telecom gap

Surge of test and measurement development tapping the local talent pool

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    SONOMA COUNTY — The past 15 months have seen a surge in high-tech test and measurement equipment development in Sonoma County, drawing down the local talent pool and filling part of the vacuum left by the receding telecom equipment industry.

    Some of the activity can be attributed to former Agilent Technologies employees putting their electronics testing expertise to new uses. But makers of a broad range of weighing, sensing, and measuring equipment for the electronics, telecommunications, agricultural, manufacturing, and biotech industries are coming into the area.

    Many are flourishing. For example, three-employee Virtual Measurement & Control in Santa Rosa leased a warehouse to hold a greatly expanded line of digital programmable scales made in its new Chinese plant, according to president San Sim. Meanwhile, fast-growing Dilithium Networks, a venture-backed wireless equipment maker in Petaluma, just signed an agreement with Japan’s largest wireless carrier NTT DoCoMo to develop a series of third-generation test cases.

    “We initially developed a protocol analyzer to help us with the development and testing of our own products. But then our largest customers asked for it,” says Dilithium founder and president Paul Zuber.

    “Our initial test product focused on interoperability testing and led to additional features, including quality of service, monitoring, and then test cases for validating mobile phones. All of our carrier customers use the test products, and between 70% and 80% of the leading mobile phone suppliers, including Nokia, Motorola, Samsung, NEC, Sanyo, and Sony-Ericsson, are also customers.”

    New focus, new players

    Some telecom component makers are shifting their focus to the testing market. Centellax, founded in 2001 to develop a physical layer component used in optical network transceivers, is building low-cost, high-performance test and measurement instruments and accessories for high-speed digital communication and signal integrity applications. With new customers among the U.S. armed forces, original equipment manufacturers, and test and measurement makers such as Agilent, “our business has never been better,” says founder and president Julio Perdomo.

    New on the block are Sensor Platforms, spun off from PNI to provide manufacturers of sensing products with a multiservice platform, and SenarioTek, targeting the wireless communications, aerospace, and semiconductor industries.

    “It’s very difficult for a startup to break into semiconductor test equipment, because the largest equipment makers manufacture overseas,” says Simi Ghiasvand, a founding partner at SenarioTek. “We start with the R&D department in the U.S. and look at the components coming in. Then we develop testing for the prototypes. Those R&D people are the ones who ultimately decide what test instruments will be used. That’s how we get in.”

    Testing follows manufacturing

    The high-tech testing industry follows the trajectory of high-tech manufacturing, and the past few years have seen a lot of consolidation among wireline telecommunications and semiconductor test equipment makers, according to Rick Nelson, chief editor of Test & Measurement World.

    “Take a look at Intel, and you can see that that area of test and measurement is not a bright spot right now. Yet in general, the semiconductor industry is a large consumer of testing equipment, especially machine vision to inspect circuit boards and wafers,” he says.

    “Traditionally, machine vision equipment makers turned out huge, expensive turnkey systems. But the price of components has dropped, and manufacturers are putting them together themselves.”

    Mark Hoersten is vice president of marketing for Cleveland-based Keithley Instruments, which opened a design center in Santa Rosa a year ago. He believes the test and measurement industry is experiencing an uptick.

    “I recently attended a symposium put on by the semiconductor industry, which is a bellwether for electronics test and measurement. The speakers were very upbeat about the coming year,” he says.

    Keithley’s customers include manufacturers in the automotive, computer, medical electronics, telecommunications, test and measurement, and semiconductor industries.

    Paper and textile mills — two areas addressed by Web View of Petaluma and Automation Partners in Cotati — are extensive users of machine vision, according to Mr. Nelson.

    But the most active sector of the testing industry is wireless telecommunications.

    “Anything to do with testing cellular phones, WiFi, hot spots, and wireless services is attractive, especially for startups, who could never afford to break into semiconductor test equipment,” says Mr. Nelson. “Even the large semiconductor test equipment makers would do well to diversify into that area.”

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