Talk from the hip at Microchip

Dennouncing 'Internet of Things'
EE Times: When we discussed Microchip’s Internet of Things strategy a month ago, you pretty much denounced it.

You said then: “The Internet of things is a very nice buzz word. Since 1999 – 2000, people have been talking about putting an IP address in every toaster, or maybe connecting a microwave to the Internet. Did it happen? No.
 
“People also talked about energy monitoring, where they connect air conditioners, electric meters and water heaters to a central panel at home to monitor the energy usage.  

“But 99.9 percent of water heaters you buy today can’t talk to anyone. These things require a major retrofit cost. The Internet of Things is a good line, but it’s not going to happen in high volume any time soon.”

Have your views changed?

Sanghi: I view ‘connectivity’ as a key to the machine-to-machine communication. USB, RF, high-performance Ethernet, low-power Ethernet, Bluetooth, IR, RF, MiWi (Microchip’s proprietary wireless protocol), you name it.  Every one of them is available on MCU. I see that the Internet of Things may have a role to play in certain connectivity areas.

EE Times: Does Microchip believe the Internet of Things can help grow its business?

Sanghi: No. I don’t build a business strategy based on a single buzz word.

Financial analyst:  Microchip was never a big fan of fast-moving low-margin businesses like computers or consumers. Are we seeing a new pattern here in your move to buy SMSC? Or did you view [the value of] SMSC cheap in today’s market?

Sanghi: What do you do when you have enormous amount of cash? Today, Microchip has $1.8 billion in cash. We are already paying a near 4 percent dividend, having taken it as far as we could. So, what should we do?

Over the last decade, Microchip was focused on building manufacturing infrastructure – in Oregon, Thailand and others. That’s where most of our investment went. In this decade where the fab lite strategy is prevalent, our focus is in less capital intensive investment. That means to acquire companies and expand our product line.

We are doing this judiciously, and we are holding our management team and myself accountable for not blowing cash for bad acquisitions – unlike other big companies. We will deliver tremendous value to our shareholders.

EE Times: Now you have a plethora of cores for your microcontroller product line. In addition to your 8-bit and 16-bit PIC MCUs and your MIPS-based 32-bit MCUs, SMSC has brought along their own MCU cores. Where do you go from here?

Sanghi: As we said before, core is not important. Yes, SMSC has its own specialized MCUs based on ARM, ARC and 8051. Making a choice on cores is not paramount. They can stay as they are. Convergence on architectural choices may happen over time, as the Microchip and SMSC teams start working together to build cores.

More important [for us now] is the development of compatible tools, services, support and libraries.

Financial analyst: Now that MIPS is up for sale, how do you see the future of MIPS? The support for the architecture is going to be a challenge?

Sanghi: Core is not that critical to solutions we offer. We see no changes in our strategy in [using] MIPS.