Building A Microchip Company From The Ground Up

Jessica Gomez built a microchip company the hard way: from the ground up, starting with elementary experience and no capital. Yet last month, her small company, Rogue Valley Microdevices, was able to announce it will receive up to $6.7 million in direct funding from the Biden administration under the same CHIPS and Science Act that is disbursing hundreds of millions of dollars to chip-making giants such as Intel and Advanced Micro Devices.

Rogue Valley’s grant will support construction of its microelectromechanical systems (MEMS) and sensor foundry in Palm Bay, Florida, which will nearly triple the manufacturing capacity of the company that Gomez grew and is headquartered in Medford, Oregon. MEMS are a high-mix, low-volume form of wafer that is crucial for defense and biomedical applications.

After the expansion of its Florida facility is complete, Rogue Valley will be employing about 75 people there and realizing annual corporate-wide revenues of about $35 million to $50 million. “We were constrained capacity-wise, and now we’re on the downhill side of that,” Gomez tells Chief Executive. “It’s pretty typical for the industry to go through cycles, but our long-term trajectory is quite good. This initiative by the U.S. to really strengthen the U.S. supply chain and [supply] diversity is actually a good thing.”

It’s a thing in which Gomez never could have anticipated that she would participate. The New York native took an assembly job at a Lexmark inkjet-chip factory while working her way through Suffolk Community College and felt claustrophobic the first time wearing a clean-room suit. “It was a great experience,” she says. “Then I moved into software implementation, which gave me a global view of the process. I got to see from start to finish how chips are actually made, which was valuable.”

She moved to Southern California and weaved through the burgeoning chip industry there to work for a contract manufacturer. There, she met her eventual husband—Rogue Valley co-founder, vice president and CTO Patrick Kayatta—and they experienced the demise of their employer. But full of confidence in what they knew and in the future of the industry, 20 years ago they basically picked up the innards of the defunct company’s clean room, shipped it to southern Oregon, and started Rogue Valley.

“We had no clue how hard it would be,” says Gomez. “I was 26 years old then and had no idea it would be near impossible. Our idea—we’d kept all the paperwork and POs and instructions from when we were running the [chip]-foundry business—as we sat on our living-room floor was to divide those things up into jobs that were easy and made money and jobs that were difficult.

“We took the easy-money pile, and those are the first pieces of equipment that we bought. We took out a second mortgage on our house, bought our first piece of equipment for $20,000—and it was just a boat anchor; it didn’t work. It was rusted.”

But Rogue Valley persevered, initially taking on contracts to provide thin-film coatings on silicon wafers. “It was tough but there was a market for it, and we got good at it,” Gomez recalls. “With any little bit of revenue we had, we wouldn’t pay ourselves. Any excess we had, we reinvested in purchasing new equipment and bringing in new materials.”

The Great Recession cut Rogue Valley’s business “in half,” Gomez says, but the company added photolithography services and “started making actual devices. We started doing some small device work for universities, and for companies that were exploring new technologies, and continue to grow our technology.”

The company’s small-batch capabilities were ideal for growing its share of the MEMS business, which is “very specialized, where you don’t need millions of units.” Rogue Valley “borrowed from every source we could find: bank loans, credit cards. We would pay off one thing and, showing good EBITDA, take out another loan against that,” Gomez says. “Eventually we became fully bankable.”

An interesting kicker about Rogue Valley, too, is that, in a male-dominated industry, its six-person leadership team is entirely women—except for Kayatta.

Here’s some advice from Gomez for other CEOs who like building and running “bankable” mid-market companies:

See around corners. Rogue Valley gets early looks at advanced chip technologies and applications because “a lot of our new customers are in R&D, and we start working with people early on in the development cycle, and we see the landscape of what is happening in emerging technologies,” she says.

Be good to customers. “Treat them how you want to be treated: Be really good to them,” Gomez advises. “They’re the future of your company.”

Keep costs down. Part of that, she says, is “owning your own real estate if you can.”

Meet employees’ needs. Rogue Valley is trying to figure out how to provide on-site child care for employees who are parents, a stiff undertaking—and perhaps still not allowable due to regulations—but something Gomez believes is important. “You can be really successful at work having your babies close to you,” she says.

Love your frenemies. “It doesn’t matter if you have a competitor next door; work with them. It’s important. We work on a lot of joint projects with competitors and even share customers in many cases. We send people back and forth between those companies and have really open relationships. We’re all pulling in the same direction and trying to support the industry and technology development and commercialization. Having those relationships is important in this industry; people move around.”

Consider Florida. Oregon’s regulatory environment made it problematic for Rouge Valley to consider expansion there beyond its existing factory, Gomez says. “The business environment in Florida is much better.” She considered Texas, North Carolina and Colorado for the company’s new fab plant but ended up selecting Florida because of its overall business-friendliness, a tech-experienced workforce on Florida’s eastern mid-state “Space Coast,” a reputation for doing a good job of workforce training and the opportunity for Rogue Valley to own its real estate.