An investment firm, Dialectic Capital Management LLC, has sent its second letter to the stockholders of CMD, blasting CMD and claiming it has ''poor corporate governance.'' The firm also urged the chip maker to elect three of its own directors.

Dialectic's director nominees are John Fichthorn, J. Michael Gullard and Kenneth Potashner. In response, CMD has sent letters to stockholders, urging them to vote for the board's nominees on the proxy card.

Dialectic is the second largest stockholder of CMD and beneficially owns 2,025,011 shares, representing approximately 8.8 percent of that company's outstanding common stock.

In recent weeks, Dialectic has lashed out against CMD and its overall performance. ''We are not seeking control of (CMD),'' according to the first letter from Dialectic. The letter was recently displayed in public.

''We firmly believe a reconstituted board is vital to the company's future success and are therefore seeking to elect three independent and experienced directors to represent the interests of all CMD stockholders. Rather, we want to ensure accountability at the board level by electing directors who can evaluate the opportunities and challenges at CMD with an ownership mentality and an open mind,'' according to the letter.

In that letter, the investment firm blasted CMD's management. ''In the eight years since Robert Dickinson was named CEO, the company's enterprise value has fallen from $82.7 million to less than $10 million and its accumulated deficit has more than doubled from $31.3 million to $65.6 million,'' according to the letter.

''We believe this decline in value is a direct consequence of the inability of management, under the direction of the current board, to capitalize on the company's early success with chip-scale-packaging technology, respond to competitive dynamics within the protection industry and implement a sustainable business model,'' according to the letter.

''In our view, under the current board, CMD has been a rudderless ship whose hopes are precariously pinned to the uncertain business of a few large, top-tier customers. We have already seen the failure of that business strategy with the decline of CMD's Motorola business back in 2006, which precipitated a string of losses in eight of the company's 12 most recent fiscal quarters,'' the letter said.

Like the first letter, the second letter pulled no punches. CMD's June quarter results paint the picture of a dormant enterprise with declining revenues and a lack of strategic initiatives to drive future growth. While the semiconductor industry as a whole achieved a 17 percent sequential rebound in revenues, CMD barely managed to expand revenues 2 percent sequentially, posting its lowest sales figure in seven years,'' according to the letter.

''Analysts are projecting that CMD will continue to lose money at least through fiscal 2011 and that revenues will stagnate in the sub-$50 million range. Unsurprisingly, the majority of analysts are recommending against buying CMD stock, even as the company trades with a dismal valuation,'' according to the letter.