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Aug. 11, 2003 — In 1975, Palomar Technologies began life as a small assembly and test division of a major aerospace company (Hughes Aircraft Co.).
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Two decades later, the company went out on its own as the result of a management buyout. Over the next few years, the company switched its focus from manufacturing assembly equipment to providing complete assembly-line products.
“We focus on the high end/value market where customized precision is required, including military applications, biomedical/medical MEMS, and tunable lasers and optical switches for the telecom industry,” said Bruce Hueners, vice president of marketing. “In other words, we connect the power on a microchip or MEMS device to the outside world.”
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The company said its integrated approach would not have been possible had it not formed strategic alliances with Axsys Technologies, Creative Automation Inc., and ILX Lightwave Corp. in 2002.
Later that year, Palomar acquired Axsys’ fiber automation division, which helped Palomar become increase its market share in the global telecom industry for precision assembly equipment. Palomar is the only company that provides integrated products in these niche markets, according to Stephen Montgomery, president of ElectroniCast Corp., a market research firm.
Although the telecom market is currently stagnant, Hueners believes the company is well positioned for the market’s eventual rebound. “Because we can reduce manufacturing costs by an order of magnitude, we will be a key enabler in the telecom’s recovery,” he said.
“Telecom activity is picking up so therefore it’s the right time for Palomar to get its name out and push the market,” Montgomery added.
Hueners said that Palomar has diversified enough to survive downturns. Other strengths are derived from the company’s technical staff, its collaborative approach with customers and its commitment to research and development.
“Over 50 percent of our staff are engineers who love to solve problems,” said Hueners, who is also an engineer. “They bring back ideas and then we test solutions with customers, who then help us co-invent new products.” The company is also committed to investing 15 percent of its sales to research and development, even in a down economy.
This commitment helps the company continue to push the envelope on precision and throughput. In 2003, Palomar announced the availability of its Model 6500 component assembly cell for optoelectronic packaging applications and three new versions of its wire bonders with improved productivity for complex hybrid microcircuits, optoelectronic, RF and microwave applications.
Despite these successes, Palomar continues to evaluate its roadmap and look for future partners. But predicting what is needed is difficult. “It is like launching a missile at a moving target,” Hueners said.
Montgomery said that Palomar has the experience and capability to achieve double-digit growth rates over the next few years. However, one challenge that remains is proving to customers that there is a return on investment when cheaper labor is available. “Palomar must convince customers it can help them with their proprietary processes,” said Montgomery, “and this requires a lot of marketing. Customers always want a better product and flexible equipment that can quickly adapt. Sometimes they believe that humans are just as good for providing this flexibility.”
“The lack of competition may also be a disadvantage,” Montgomery added, “as buyers take a wait-and-see approach for new competitors.” Such competition could come from Asia, as well as from other companies who spin off their proprietary machines. But since Palomar appears to have a jump on these competitors, he said, the company may remain ahead of the pack.
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Company file: Palomar Technologies
(last updated Aug. 11, 2003)
Company
Palomar Technologies
Headquarters
2230 Oak Ridge Way
Vista, CA 92083
Palomar also has a photonics production facility in Pittsburgh
History
Palomar originated in 1975 as part of Hughes Aircraft Company Assembly and Test. Twenty years later it became an independent company after a management buyout. Palomar’s focus then shifted from defense-oriented engineering to commercially targeted electronic assembly technologies. During the next seven years Palomar released several award-winning assembly systems.
In 2002, Palomar announced a strategic alliance with Axsys Technologies. This alliance led to Palomar’s acquisition of the Axsys Fiber Automation Division in October 2002; the division was renamed Palomar Photonics Automation.
Industry
Packaging and assembly equipment
Employees
150
Small tech-related products and services
Palomar develops “pick-and-place” assembly and alignment equipment used in the manufacture of optoelectronic, MEMS- and RF-based components. Its 3500-II automated MEMS packaging system eliminates human contact with components during assembly. The Model 8000 high-speed wire bonder places up to eight wires per second, offering an increased work area for improved throughput.
Management
Selected strategic partners and customers
Selected competitors
Barriers to market
Palomar must provide customers with good return on investment while heading off competition from Asian companies that have taken advantage of cheap available labor.
Goals
“We want to keep our current customers and build market share,” said Bruce Hueners, vice president of marketing. “Over the next five years we want to achieve a CAGR (compound annual growth rate) of 20-30 percent.”
Why they’re in small tech
“Small tech enables us/customers to leverage our/their core competencies,” said Hueners.
Relevant patents
Bond head having dual axes of motion
Recent articles
Palomar unveils MEMS packaging system
Contact
— Research by Gretchen McNeely