Dr. Ted Tewksbury, president and CEO of Integrated Device Technology shares with Electronics Weekly his view of the semiconductor market and the factors which will shape both the market and the company in 2012.
What is the biggest opportunity in terms of technology and/or markets in 2011?
Ted Tewksbury: The megatrend that’s driving growth in our industry today is the mobile Internet. People want to carry the Internet with them everywhere and access it any time, from any device. Three technologies are making this possible – cloud computing, mobility and 4G wireless infrastructure. These secular trends will drive IDT’s growth for the next several years, and we have a business unit dedicated to each of them.
Cloud-based data centers need servers and memory systems with higher performance, lower power and more virtualization. The new IDT is making this possible with the industry’s most comprehensive portfolio of server solutions including timing, PCI Express switches, memory interfaces, power management, enterprise Flash controllers and signal integrity products. Today, we have an average $15 of content in every server, and we expect that number to triple over the next three years.
As processing and memory increasingly move to the cloud, mobile device manufacturers can focus on what matters most to consumers – low cost, long battery life and natural user interfaces.
IDT is making this possible with highly integrated system solutions that combine our traditional timing expertise with our new analog, power, battery management, video and touch technologies. These new products open up a $2 billion fast-growing mobile consumer opportunity.
The explosion of data traffic generated by the mobile Internet and cloud-based applications is driving the need for the “fatter pipes” and greater bandwidth provided by 4G wireless infrastructure.
IDT is building on our No. 1 positions in timing and Serial RapidIO switches with new products, such as our radio frequency (RF) solutions, to complete the signal chain between the antenna and digital signal processor (DSP) in wireless base stations. Today, we have about $50 worth of content in every base station, and we expect this to double over the next three years.
Altogether, these new opportunities have enabled us to grow our available market from just over $1 billion 3 years ago to over $5 billion today.
What challenges in global markets are keeping you busy at the moment?
Ted Tewksbury: I think the biggest challenge is explaining to Wall Street, getting the analysts to understand that it does take time to turn around a company. Basically, in the semiconductor industry it takes about 3 to 5 years from the time that you define a product to the time you develop it, get it designed into customer systems, get it qualified, get it ramped up into early revenue, and then get it to peak revenue. Analysts and investors typically have a short attention span, so that’s the biggest challenge. Right now, we’re about 3 years into this 5-year turnaround. So, with that timeline constantly in mind, the next couple of years are going to be the most fruitful for the company in terms of revenue growth.
If you had to name one design technology with the largest commercial potential this year, what would it be?
Ted Tewksbury: With mobile Internet as the biggest opportunity in technology today, I would say that within that arena fourth-generation LTE is the design technology with the greatest potential for IDT in Europe. IDT plays a prominent role in the mobile arena by enhancing the user experience with touch interface, video and audio. But as people become more untethered, they want to carry the Internet around with them everywhere they go, and that is why base station growth is so important.
IDT has the most complete portfolio of solutions that go into wireless base stations to enable the fourth-generation LTE infrastructure that’s rolling out now. IDT’s base station components include our timing products and our Serial RapidIO switches. We anticipate the number of IDT products in wireless base stations will double over the next three years, so it’s a great place to be.
The cloud, 4G/LTE and mobility are the three major drivers for our business, and we’re really in the right place at the right time with the right products to ride those waves, not only in Europe but also in many other places across the world.
What does Europe need to do to ensure it retains a leading position in the global market?
Ted Tewksbury: The world increasingly depends on the mobile internet to connect its populations and this is driving an explosion of wireless data between the “cloud” and consumer mobile devices such as smartphones and tablets. All of this data traffic needs the “fatter pipes” and greater bandwidth provided by 4G/LTE wireless infrastructure. As home of several of the world’s most innovative telecom companies, Europe is instrumental in developing and rolling out this technology. By enabling greater data speeds and capacities, 4G/LTE provides the foundation for the growth of numerous other applications such as cloud computing, mobility and social networking.
In order to realize this potential and maintain its leadership, it is imperative that Europe’s political leaders and central banking system collaborate to solve the sovereign debt crisis that has cast the Euro-zone into turmoil and uncertainty. Without stability in the banking and financial systems, Europes’ businesses and manufacturers will not have the confidence to make new investments in these technologies and consumer demand will continue to deteriorate. A strong Eurozone economy and continued technology innovation are the keys to extending Europe’s leadership throughout the 21st century.
Over the last few years, IDT has transitioned from a digital solutions supplier to a mixed-signal solutions provider. Pairing analog and digital engineers can be a difficult task as they have different objectives, schedules and communication methods. What best practices has IDT employed to create effective digital/analog teams that can create quality products while meeting time-to-market requirements?
Ted Tewksbury: The key to bridging the analog-digital divide is to focus the entire company on the only thing that really matters: optimizing our customers’ system performance, cost and time-to-market. This necessitates tight collaboration between analog and digital designers. At IDT, we have institutionalized several best practices to facilitate this:
• Every IDT business unit is focused on a specific vertical market segment and contains both analog and digital engineers who work together to develop system solutions.
• Every mixed-signal project team includes three key functions in addition to analog and digital designers – a system architect, a product definer and a program manager. These may or may not be the same individual, depending on the complexity of the project. The system architect has a deep understanding of the customer’s application and can make the right tradeoffs between analog, digital and software. The product definer specifies block-level features and performance parameters. The program manager is fluent in the languages and techniques of both analog and digital designers, and manages schedules, deliverables and interfaces. These individuals are the glue that holds the team together, translating between analog and digital dialects.
• Weekly project meetings include all of the above functions to drive execution, address technical issues and facilitate collaboration.
• We have instituted formal and informal technical forums in which analog and digital engineers can share ideas, tools, techniques and best practices, and educate each other in their respective domains.
• Variable pay is tied to the success of the overall project. Everyone succeeds or fails together.
This culture has enabled IDT’s analog and digital engineers to work collaboratively in the development of sophisticated system-level chips. For example, IDT recently introduced the industry’s most intelligent and flexible power management system for portable consumer devices, integrating a microcontroller, audio subsystem, clock generation, power and battery management, touch controller, light-emitting diode (LED) drivers, speaker and headphone drivers, analog-to-digital conversion, and other functions.
In 2009, IDT started the transition from fab-lite to fabless. What benefits has IDT seen from the move, and do you see this trend continuing?
Ted Tewksbury: IDT made the move from fab-lite to fabless for four reasons. First, our system solutions strategy required a variety of process technologies – fine-line CMOS, SiGe and BCDMOS – that would have been prohibitive to develop in-house. Second, foundry economies of scale enabled us to achieve lower wafer costs. Third, we were able to focus our limited research and development (R&D) on what we do best – product innovation – and leave wafer manufacturing to the industry experts. Fourth, outsourcing wafer fabrication emancipated us from quarterly swings in fab utilization, which impacted our financials. I’m a firm believer in using the lowest-cost technology that can get the job done in any particular application. The fabless model removes the constraint of having to keep our fab filled and enables us to make the right technology decisions for the business.
In fact, IDT recently announced that we intend to sell our Hillsboro, Oregon wafer fabrication facility and related assets to Alpha and Omega Semiconductor. This announcement marks an important phase in IDT’s transition to a fabless semiconductor company. Our system solution strategy requires access to a wide variety of process technologies and an ecosystem of outsourced manufacturing partners.