One of the biggest changes in the data converter business in the last 12 months has been on the acquisition front.
The deal that got the most notice was Texas Instruments Inc.'s $7.6 billion acquisition of Burr-Brown Inc., but it wasn't the only one. At the beginning of this year, Microchip Technology Inc., Chandler, Ariz., a company best known for its 8- and 16-bit microcontrollers, acquired data converter manufacturer TelCom Semiconductor Inc., Mountain View, Calif., in a stock swap valued at $300 million.
TI and Microchip both aim to enhance their positions in data converters.
"As we complete the integration of TI and Burr-Brown, we will bring tremendous knowledge and experience to our solutions," said Don Traver, marketing manager at Texas Instruments' Data Acquisition Products Group in Tucson. "A year from now, you'll start to see some unique solutions coming out of TI."
Like the deals themselves, the group meetings at TI reflect a fundamental reality of the data converter and embedded processor businesses: increasingly, they are joined at the hip, and anyone who wants to succeed in one needs a strong position in the other.
Data converters are designed for specific jobs that usually involve processors. A company such as TI or Analog Devices Inc., Norwood, Mass., a leader in digital signal processing, or Microchip, which is built on microcontrollers, needs a strong connection to data converters that are the source for their input and often the sink for their output as well.
Some data-converter makers, such as Analog Devices and National Semiconductor Corp., already had the connection. Others had to acquire it or significantly strengthen it, as TI did.
This is of particular importance because data converters are usually designed to do specific jobs and increasingly to meet specific needs of certain customers. "If you need to develop a 16-bit A/D converter, first you have to find the driving customer," said Raja Yazigi, international product marketing manager at Philips Semiconductors in Caen, France.
"It's very difficult to design an ADC with general parameters," Yazigi said. "The problem is that each customer uses the ADC in his own way. We have to work closely with customers and with system labs internally to Philips to have enough system information to develop the application. In fact, the main issue in our business is how closely we can work with the customers."
Obviously, this kind of extremely close coordination is much easier if the company also has the processor expertise in-house. For OEMs and distributors, such combinations have the added advantage of simplifying the supply chain by combining sources. For distributor Insight Electronics Inc., for example, TI's acquisition of Burr-Brown was a good thing. Insight had been a Burr-Brown distributor and now handles TI.
"TI filled in a spectrum of the data converter area for us," said Jim Stevens, director of technical marketing at Insight, San Diego. "It lets us add some customer applications that we weren't able to serve prior to having the full TI line." -R.C.