Lothar Maier, chief executive of Linear Technology Corp., describes the analog chip maker as "predictable" and even "boring." But Linear (Milpitas, Calif.) is far from dull. In an interview with semiconductor editor Mark LaPedus, Maier disclosed that the company recently considered a private-equity buyout, refocused its product efforts and moved to cut its capital spending. The CEO also discussed Linear's new module strategy and Texas Instruments' efforts to grab share in the power-over-Ethernet device market.
EE Times: What is the overall outlook for analog in 2008?
Lothar Maier: Look at the WSTS [World Semiconductor Trade Statistics] forecast for analog. It's not always the most accurate forecast, but it's predicting that analog will grow about 10 percent in calendar 2008. The overall semiconductor market is growing at 7 percent. [Last year] was flat overall; 2008 won't be a banner year. It is not atypical for the analog market to grow 15 to 18 percent per year. But 10 percent is better than a flat year.
EE Times: Where are we in the analog cycle?
Maier: I think analog is somewhat less cyclical than, say, DRAM and even digital electronics. The markets go up and down. Analog is not immune from that. The ups and downs in analog are softer, because it's so diverse. Analog is also very fractured.
EE Times: What are Linear's growth goals, and how would you characterize the company?
Maier: Internally, we guide that the company is planning to try to grow 15 to 20 percent a year. Some years we're successful and some years, we're not.
I hate to say it, but we're kind of the boring analog company. We tend to just have a business strategy that values predictability. That doesn't make for very good press. But over the last 25 years, we've gotten pretty good at it.
EE Times: What do you think of private-equity buyouts for the semiconductor industry?
Maier: That fad is looking as if it may have passed, a little bit. It's certainly something we have thought about in the past. We did some financing to buy back our stock [six months ago], and certainly, one of the internal discussions was should we buy it all back through some kind of private equity. I think companies that are candidates for that type of financing are companies that [need to be] fixed up and then sold again.
Looking at our company, we couldn't decide what needed fixing up. We just need to do more of what we're currently doing. There aren't too many parts of our company that are not operating very well. So we really didn't think we were a very good candidate for private equity.
EE Times: Is there any room for new, VC-backed analog startups?
Maier: The question is, is there an opportunity for a startup company to get into the high-performance analog space? It's very difficult, because those opportunities tend to [involve] relatively small amounts of customers and relatively low unit sales. Venture guys don't usually like to fund a lot of money and have to wait a decade for a return. It's a hard market to break into.
EE Times: What changes have you seen in Linear's product focus?
Maier: Military and space products, in the early days of the company, were important. Later, industrial was important. Then, automotive was important and then communications and consumer. Now, we're coming back around full circle, and consumer is no longer as important as it was a few years ago. Now, automotive/industrial is back being important for us.
EE Times: What happened to the consumer markets?
Maier: The growth of the company from the post-dotcom bust to a few years ago was driven by high-end consumer products. It was driven by cell phone products. But those markets became more and more commoditized.
EE Times: Other growth markets for Linear?
Maier: The opportunities include industrial. Automotive is certainly a good market. A few years ago, automotive was only 3 or 4 percent of our sales. In the last reported quarter, it was 10 percent of our sales. It's a $100 million-plus business for us. And finally, believe or not, we're getting excited about military and space again. Linear had sales of 3 or 4 percent into the military space. Last quarter, it was close to 5 percent of our sales. That's driven by a lot of satellites, which are going through their life cycles.
EE Times: What's going on in the power-over-Ethernet device market?
Maier: Linear has had a strong presence in power-over-Ethernet. Three or four years ago, we introduced our first generation of products. We're presently in the process of introducing our second generation of products. It's sampling. In the next three months, we'll announce that.
EE Times: Is Texas Instruments bombing the prices in the power-over-Ethernet device arena, as some have speculated?