Dylan McGrath EE Times (06/25/2009 5:25 PM EST)

SAN FRANCISCO—Chip vendor SMSC said Thursday (June 25) it plans to outsource some of its production test operations to Asian suppliers. The affected operations are currently handled in New York State.

SMSC (Hauppauge, N.Y.) also said it managed to beat its sales target for the quarter ending May 31, though revenue was down 33 percent compared to the same period of 2008.

SMSC reported sales for the quarter of $62.5 million, up from 22 percent from $51.2 million in the previous quarter, the company said. The company revised its quarterly guidance upward last month, saying it expected revenue to be between $56 million and $61 million.

In a statement, President and CEO Christine King credited stronger-than-expected revenue from the PC market. King said the consumer market also appears to be strengthening in Japan and Europe, following improvements in North America and Asia.

"We are seeing promising indicators that the semiconductor market will deliver more normal seasonal patterns in the second half of the calendar year," King said.

SMSC posted a loss for the quarter of $9.2 million, compared to a net income of $4.5 million in the year ago quarter.

King said the transfer of the production test operations is expected to improve the company's gross margin once completed at the end of the company's fiscal year.

In January, the company said it would cut 5 to 10 percent of its workforce to reduce costs.

SMSC expects revenue for the current quarter to be between $68 million and $72 million.

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