Computer producers find safety in niches. (small computer firms in Massachusetts specialize in the face of the new wave of mergers leading to a scaled-down market)(Focus: Midyear Economic Report)

Computer industry giants in Massachusetts see contraction on several fronts at midyear, while niche producers in the hardware arena are exploding with growth. Meanwhile, the state's software developers are growing and showing a new inclination to expand through merger and acquisition.

Among the hardware suppliers filling niches in the computer industry, Vicor Corp., based in Andover, is a standout. The firm manufacturers a unique power supply system for high-technology equipment, and last year its earnings doubled to $5.1 million. In the first quarter this year, total revenue at Vicor was up 40 percent over the same quarter last year while net income during the period was 63 percent above the first quarter 1990 figure, according to Thomas St. Germaine, Vicor's chief fiscal officer.

Niche producers involved in manufacturing memory expansion systems and developing networking hardware and software are also coming on strong, said William Becklean, a telecommunications analyst and senior vice president at Tucker Anthony of Boston.

"We're seeing 30 |percent~ to 40 …