The soft global economy threw Gregg Lowe an unexpected curveball.
The Texas Instruments Inc. senior vice president and head of analog IC division was on track to push his division's contribution to total company revenue above 50 percent from 40 percent currently when the economy soured, leaving him scrambling to boost sales.
TI's analog revenue grew 4 percent in 2007 to $4.93 billion but sagged in 2008 to $4.86 billion as demand wilted. The unit had contributed $1.55 billion to TI's operating profit in 2007 only to see this lopped down to $1.1 billion for 2008.
Still, Lowe believes the company's future growth will come from the analog business and many industry analysts agree TI will eventually be better known as an analog IC supplier than a DSP company especially if it continues to pour investment into the division.
In order to ensure growth in this segment, however, Lowe has been spending more time on the road lately, scouring the globe for new design wins not only in the traditional North American and European centers but also in cities across China and in India.
During recent trips to several cities in India, Lowe said he discovered many companies continue to rely on TI's extensive sales force to help support their design operation at a time of intense cost-cutting. Ti, he said, is also exploring opportunities in solar and power-management even as the management is moving to reduce operating costs in response to slowing demand.
Among the greatest challenges facing TI and other analog competitors are helping customers through the difficult economic environment and designing products for the growing energy management and solar industries.
TI's continuing dominance of its market sector will require that the company continue to make acquisitions in the analog area although it is focusing on smaller "tuck-in" transactions rather than the large purchases that helped it establish a strong presence in the market.
Lowe spoke with EE Times business editor Bolaji Ojo. The transcript of the interview follows:
EE Times: What is the overall strategy that TI has for the analog market?
Lowe: At the highest level, TI has a very comprehensive strategy as it relates to the analog business. Our business is categorized into three major sub-businesses. The first is high performance, which includes things like data converters, amplifiers and interface devices that are used as standard products in a number of different applications.
The second is power management, which as the name implies includes power management, DC-DC converters, controllers and so forth and the third unit is our high volume analog parts, which focus on relatively concentrated applications that tend to drive high-volume.
Those three different businesses make up TI's overall analog business. We approach the market in a very comprehensive way. What we are attempting to do is solve many of our customers' problems and not just one specific thing.
TI has the ability to solve customers' problems across the spectrum of high-performance analog standard chips, power management chips, which are used in a broad range of applications. These really help our customers solve the entire spectrum of their challenges.
EE Times: Being a supplier with a wide range of products in the analog market has numerous advantages but it also means TI has to devote more resources to R&D, sales and marketing activities to support this?
Lowe: You are absolutely right. We have to do a great job in those sub categories and we actually do a pretty decent job. According to various market analysts, TI is No. 1 or No. 2 in power management, amplifiers, interface and data converters, meaning we've got a pretty decent portfolio in each of those sub categories. We spend a lot of time and energy making sure that our individual components can be competitive with the best in the industry.
When you offer a complete solution it allows the customer to the market faster than when dealing with a single supplier. It also enables TI to basically go deeper into the customer base, in other words, call on more customers and especially smaller customers.
We are able to do this because our broad portfolio makes it economically viable for us to approach small customers earlier in their own development as a company where their semiconductor purchases might be relatively small as an early start up. TI can afford to call on customers like that because we can get a higher percentage of their relatively small semiconductor spend.
The second part of your question is about the cost disadvantage relative to size. I don't see that at all. In fact, we might argue that we have the cost advantage because we can leverage our sales force across a much broader array of products. In terms of developing the products themselves we are very competitive and TI has a long history of manufacturing expertise and improving yields.