Last year was good to Westlake Village-based semiconductor manufacturer Diodes Inc. Over the course of 2005, the company managed to nearly triple its stock price, markedly increase its revenues and net income and raise $70 million in additional funding earmarked for acquisitions. Additionally, the company capped off the year with a $30 million cash purchase of Anachip Corp., a Taiwanese semiconductor firm. As Diodes had previously been known for making discrete semiconductors, the Anachip purchase will allow it to enter a new area within the semiconductor space known as analog. The analog semiconductor products typically differ from discrete semiconductors in that fewer of them typically are placed onto a given chip. According to Carl Wertz, Diodes’ chief financial officer, the Anachip purchase will allow the firm to market new products to a similar client base. “The products that Anachip manufactures will go into flat panel television sets, DSL modems, television set-top boxes, numerous power supply products, DVD players, and other various electronic products,” Wertz said. “Basically, we’re already selling to much of their same customer base and a couple of the companies that we’d been working with had already asked us for help in this area. We knew that the acquisition would be an ideal fit.” Diodes expects Anachip to be an accretive acquisition for 2006, as the Taiwanese firm recently posted yearly revenues of $35 million and net income of $2.5 million. When the year began Diodes’ stock was trading at the $13 range and as the months went by it began to climb rapidly. At the close of trading on Jan. 6 of this year, Diodes was trading at $34.40 as the company increased its net income in each quarter of the year, most recently posting net income of $8.4 million on revenues of $54.2 million for the fourth quarter of 2005. And for the last quarter of 2005, Diodes had already upped its guidance, claiming that it expects its revenues to grow by 10 percent to 12 percent sequentially over its third quarter sales. The new forecast suggests fourth-quarter revenue of $59.6 million to $60.7 million. Forbes ranking And Wall St. has certainly taken notice, as three investment firms initiated coverage last year alone. Additionally, Diodes was named the 26th best small company on Forbes magazine’s list of the 200 best small companies in America. Steve Smigie, the vice president of equity research for Raymond James & Associates, is also bullish on the company, giving it a “strong buy” rating. “Diodes has a very successful track record of growth and I think it will continue,” Smigie said. “Their acquisition of Anachip creates the opportunity for significant growth.” In particular, Smigie singled out the company’s skill in a process known as “packaging.” The role of packaging is to “house” the processor die, supply it with electricity and act as the interface between the silicon and the rest of the computer system while protecting it from dirt and physical dangers. “They’re really good at this packaging technology and they will apply this skill to the analog chips,” Smigie said. “It should allow them to get into more markets and give them a product that can drive more significant gross margin improvements.” And for 2006, Wertz indicated that Diodes is striving for 15 to 20 percent revenue growth and that it will likely be in an acquisition mode. “We’re very focused on leverage and we’re hoping to grow 15 to 20 percent per year. During the downturn in 2001, we learned a lot of lessons in the industry down year and learned how to run the business better,” Wertz said. “I’m sure that within the next several months, there will be additional acquisition announcements. The acquisitions that we’re looking at are very similar to Anachip. We’re looking for research and design companies so that we can expand our packaging that we bring to the table.” Currently, the overall semiconductor industry has a positive outlook. “The industry numbers are picking up which means that as we come into 2006 we’re seeing decent momentum,” David Wong, an analyst with A.G. Edwards Inc., said. “A number of companies have raised guidance for the fourth quarter and there should be good growth for 2006. 2005 had growth between eight and 10 percent year-to-year growth for integrated circuit sales and I think we can do better in 2006, somewhere between 10 to 20 percent growth.”