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Alive and Kicking Analog ICs are back in vogue, with major suppliers serving up new applications for increasingly demanding end markets
Analog products often conjure the image of stodgy, unremarkable and antiquated technology. Even when prefaced by a "high performance" modifier, the idea of analog seldom suggests trendy or life-changing devices that dazzle, like handheld digital music players, ultra-slim cellular phones or portable medical equipment. Yet it is high-performance analog technology that brings these products to life, says Art George, senior vice president of the High Performance Analog business unit of Texas Instruments Inc. (Dallas). "The way humans interact with the system is gated by the performance of the analog ICs in that system," George says. In a recent interview with Electronics Supply & Manufacturing senior editor Crista Souza, George discussed the state of the analog IC market and how TI intends to cash in on the analog requirements of emerging applications. ESM: Microprocessors and memory always grab the headlines, but it's really the analog that's moving things along. Art George: You hear about microprocessors and the speed of the processor, and that is important. But in a lot of cases, the performance of analog in the system has become more important, and the content of analog in the system has continued to grow. If you look at a processor in a typical electronic system, there are anywhere from 10 to 15 analog ICs around it, whether it's in a cell phone, a computer or a piece of industrial equipment. Analog is a very powerful portion of what defines the performance of the system, and a very powerful and growing portion of the overall semiconductor market. ESM: And yet, there doesn't seem to be a lot of excitement and energy focused in that area. George: The microprocessor gets a lot of attention because it's something the general consumer can easily relate to--the speed of a processor or the number of instructions per second a DSP can execute. But when you talk about the ICs that enable the DSP or microprocessor from a power management standpoint, the data converters that actually allow data to get into the microprocessor or DSP and get it back out again to translate it to something that the user can experience, it's just not something that the general audience has a lot of interest in or knowledge about. And it quickly becomes something that requires a little more explanation. The fact of the matter is that analog is exciting from our perspective; it's a great business to be in. There is great synergy in a company like TI that is strong in DSP and in analog--the two most important, system-defining IC categories for all of the exciting end equipment these days. When you look at wireless communications, broadband, portable computers, cell phones,or medical equipment, if you were to crack those [systems] open and look at what's inside, generally speaking there's a large content of DSP and analog. ESM: TI's acquisition of Burr-Brown in 2001 was huge, both in size and impact. Since then, you don't see much merger and acquisition activity in the analog segment. Why is that? George: We have grown our business through a combination of organic growth, investment and strategic acquisition. In addition to Burr-Brown, we acquired very notable companies in the industry like Unitrode, Benchmarq and Power Trends. Our most recent acquisition was a small power company in Norway called Chipcon. We do it because we believe our strategy is fundamentally sound: We want to be the best provider in the industry for our end customers, with the best product portfolio, complete system expertise across a wide range of system types, and the strongest technical support worldwide. To do that, you must have a complete portfolio of products in all the major categories in the analog world: power management, data converters, amplifiers and interface products. Where it made sense for us, we looked at strategic acquisitions to fill in where we had opportunities to build a more complete portfolio, stronger systems expertise and better technical support worldwide. Again, our end goal is to be the No. 1 provider of analog ICs worldwide. If you look at TI, we attained that position for overall analog as of 2005. We believe we gained share again as we closed 2006. We also believe that we will continue to hold that high ground. To address your question about why you don't see a lot of acquisitions, they are not easy. First, it has to make strategic sense. Second, you have to be well-equipped to handle integrating other companies. And, third, it's got to be a good fit. We have learned a lot through the acquisitions we have done. It's benefited us, not only in portfolio expertise and talent, but also because many of our leaders in the high-performance analog business who now report to me were leaders at their previous companies. So we also learned a lot about the industry through acquisitions. ESM: Western OEMs are sourcing an increasing amount of components from Chinese sources. How does this change the way you approach the business? George: One of the nice things about TI is that we have a worldwide organization already. We have teams in China from sales, service and support. We have a growing team that supports our customers in the region who are designing and manufacturing products there. We have design teams that are based in China. So you're absolutely right--more and more things are happening in China in terms of manufacturing and design of the end product for big OEMs. We certainly expect to benefit from that, and we certainly are a part of that. ESM: You spend a lot of time with customers. What role do they play in TI's product development? George: Bottom line, customers are at the center of driving our product development road maps. We engage with customers all over the world to refine what our product road maps are going to look like as well as the technical details of our products. One of our strengths, we believe, is our applications and technical support teams around the world. What we have done over the last four or five years is build up a very strong team of locally deployed applications engineers who call on customers day in and day out, and work with their design engineers. We leverage both their knowledge as well as direct interaction with our customers to fundamentally drive our product development. We're getting feedback from people who are working with design engineers every day to select components. We hear the feedback on what they like and what they need for the next-generation systems. That's the input we use to feed our product development teams. ESM: So it's not a "build it and they will come" mentality?. George: That's extremely important, because we have, for the high-performance analog business alone, over 50,000 customers of record. As you might imagine, it's a very diverse set of customers. So, to define a component that will meet the needs of many customers for different applications, it really is important for us to engage with many customers. The way we're able to do that across the world in a very intimate way is via our worldwide, very strong sales force. ESM: How many high-performance analog products do you have? George: We have over 15,000 products in our portfolio. We add around 400 new products every year, so our portfolio continues to evolve and improve every week, every quarter. We've invested very heavily in our fundamental technology that we use to build products in the high-performance analog business. Not only have we added talent by hiring people, but we really try to give them the best technology in the industry to develop products by investing in process and package capability. ESM: Where is the innovation in the analog segment? Going back to what you were saying about microprocessors and DSPs, people always look for the faster speeds, the finer geometries, the lower power and so on. What does the next generation of analog look like? George: Some of those same vectors that you talked about are very applicable to the high-performance analog industry. In fact, we are helping to enable that from a systems-level standpoint. Power is a very big segment of the overall high-performance analog business. We have a very strong position in power, whether it is power management devices for portable electronic equipment like cell phones and PDAs or power management devices for things that plug into your wall. What does everybody care about? Longer battery life. They want more efficient equipment in their homes. So we, with more and more efficient power management devices, enable longer battery life. We enable electronic equipment to run with less power draw. There's an emerging trend in how audio is delivered. Five to 10 years ago, audio amplifiers were not very efficient. If you were to put 1 W of power into the amplifier, you would get maybe 20 percent out of that in sound. You lost a lot in converting to audio. One of the innovations we've been on the forefront of is the changeover to Class D [digital amplifiers that use analog techniques], which drives up that efficiency to something more like 70 percent. That enables longer battery life and higher fidelity. It also enables smaller packaging, because that lost energy is usually dissipated in heat. As our technology improves, our products can get smaller, so that's another trend we see. If you look at very small pieces of equipment like slim cell phones, you might imagine that we've had to innovate quite a bit to be able to service the needs and the functionality in those products. What our end customers want to deliver is more performance, longer battery life, more speed, better user experience and higher-fidelity audio, all in an increasingly smaller enclosure. In segments like the industrial or medical markets, the need is always for better precision. If you talk about medical equipment and diagnostics, a lot of our products are used in that end equipment to help enable very precise readings coming from very small signals. So, the precision of our products is, again, really system-defining in terms of the capabilities of the end equipment. While it's great and important to have very high-powered processors--and we hope they are DSPs--it's still gated by the quality of the data we can deliver through our A/D converter, for instance. ESM: Do those improvements come from changes to the manufacturing process? George: It's a combination of things. It's certainly better technology. That's one tool we have in our arsenal. We have invested as much as or more than any of our competitors over the last five to 10 years to have great technology. The other part of it is the talent we have in terms of [inventing] innovative architectures to enable better performance in our products. It is extremely important in our world to have great engineers. There is this combination of art and science in the analog world where, as much as having great technology is essential, the other 50 percent is about having great engineers using that technology in very innovative ways and creating intellectual property and new patents that allow us to do things in a way that our competitors have not thought of.
Crista Souza can be reached at csouza@cmp.com.
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