DVD Players Put ESS Technology In Lead Role Top Chipmaker In This Field As digital video discs rise, so too does a small firm that makes key component.(INTERNET & TECHNOLOGY)

Byline: JAMES DETAR

Most of the semiconductor industry is still waiting for a recovery. For a few chip companies, though, recovery is here. ESS Technology Inc. is one of them.

ESS has emerged as the leading maker of chips for the hot digital video disc player market. Last week, the company said its first-quarter sales rose 56% from the year-earlier period to $79.1 million. It recorded a pro forma profit of 37 cents a share vs. a per-share loss of 4 cents (pro forma results exclude acquisition charges and gains and losses from investments).

The company forecasts a 10% to 20% growth in DVD chip sales this quarter vs. the first quarter and revenue in its seasonally slowest quarter of $76 million to $79 million vs. $65 million in the year-ago quarter.

"We're winning big time in the DVD market," said Chief Executive Robert Blair.

As with many electronics markets, prices of DVD chips tend to fall fast. To stop that price erosion and maintain profit margins, Blair says ESS works to constantly add new features to its chips.

This push for more features will become more important, he concedes, as more chipmakers are attracted to a hot market.