VLSI Technology Inc, the San Jose company which gambled that its future lay in wireless communications rather than PCs, is now profiting heavily from its decision. For the first nine months of 1996, when most of its sales came from PCs, the company reported a loss of $49.5m on sales of $716.8m. But in the same period this year, with the company focusing on making chips for cellular phones, wireless infrastructure and telecommunications devices, it reported net profit of $49.8m on revenue of $519.6m. The world is simply moving to wireless. It’s an essential way of expanding telephony, which is an essential part of a developing economy, said Rich Beyer, VLSI president. Two years ago, VLSI had huge set-backs because half its money came from chips for Apple Computer Inc and Compaq Computer Corp. Then Apple hit problems and Compaq switched to Intel circuit boards and VSLI had to move rapidly to modify its library of chip designs to serve other markets. Now the only factor that worries market analysts is that VLSI relies for a quarter of its income on LM Ericson’s cell phones. But Beyer is optimistic, with communications now providing around half of revenue and he looks for 20% growth each year.
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