Maxim’s Jack Gifford lured Yang out of his academic post in Shanghai to become a market researcher for the analog company, exploring its potential in China. “We identified some opportunities, but mostly we saw mismatch,” said Yang.
Maxim wanted to make high margin products for industrial markets, but China’s focus was and still is mainly on consumer products. “For their own system designs, China’s engineers choose components that are good enough, so TI and National are more successful in China than Linear Tech and Maxim who want high margins,” Yang said.
After spending almost four years with Maxim, Yang quit to found Union with his own money and $200,000 in seed capital from a venture capitalist. “It was a crazy time of the Internet boom, my VCs had just cashed out, made a lot of money and were eager to make more--they didn’t even know the details of semiconductors,” said Yang.
A team of six people initially focused on just one product. “It was almost the same spec as a part from TI and Maxim, only at a lower price, but it was very difficult for us,” Yang said.
Yang quickly found out he had to please two customers, the hard-negotiating China buyer who just cared about price and the China engineer who was more concerned about performance and features.
“We found the engineer was not happy with one aspect of the TI and Maxim spec, the output voltage level, so we upgraded our design to increase the output voltage swing 50 percent,” Yang said.
The budding CEO convinced a lead engineer at China’s top maker of power meters it was a good part. The engineer recommended the part to his buyer who asked Yang how much it cost.
“I said, ‘you tell me the price,’” recalled Yang. “He said, ‘TI sells it for a dollar, so I’ll give you 80 cents,’ and I said OK because our cost was ten cents--everyone was happy."
The high profile design led to others, and the company survived on the single product for three years. By 2003, Union snagged $2 million in a second VC round to expand its portfolio into related interface parts. It now has a catalog of well over 100 parts in four broad areas and is self-sustaining.