Microsemi Corp. has launched a design registration program as part of a push to fortify sales through distribution.
Attracting field-applications engineers (FAEs) from major distributors such as Arrow Electronics, Avnet, All American Semiconductor, Future Electronics, and Richardson Electronics is at the core of the company's effort. "FAEs, for the most part, are driven by design wins," said Michael Sivetts, corporate director of distribution sales at Microsemi in Irvine, Calif. "Distributors have become heavily involved in design work. Microsemi needed a design registration program to increase mind-share from FAEs."
The plan, unveiled last week, aims to ensure that distributors and rep firms holding design registrations get a 30% margin. The margin would be preserved even if the OEM contracts with a distributor authorized only in the United States and then moves production elsewhere.
"Between 60% and 70% of our designs that originate in the United States are typically built in low-cost regions like Malaysia and Guadalajara," Sivetts said. "We'll work with the distributor to provide a split commission through our point-of-sale system."
Suppliers that want to thrive in commercial markets must take steps to concentrate more on OEM design needs, according to Rob Adams, an analyst at CIBC Oppenheimer in New York.
"I wouldn't count on the design registration program to pull Microsemi out of the current slowdown, but if you look at some of the top suppliers in the analog and linear space, a high percentage of their business goes through distribution," Adams said. "Microsemi expects second-quarter sales to decline 3% to 7%, putting their revenue at about $53 million. A design registration program is one way to counteract declining sales, but don't expect an instant turnaround."
Following the first year's ramp-up, the program is expected to increase revenue by 15%, Sivetts said. Microsemi logged its first two design registrations last week, which were submitted by Miami's All American Semiconductor Inc.