Ted Tewksbury, CEO of IDT talks to Electronics Weekly about design activity in OEM customers, opportunities in the current climate, and end-markets with growth prospects.
1. What impact is the downturn having on your markets?
We have not been immune to the downturn that has impacted every market in our industry. Fortunately, however, our presence in consumer, communications and computing provides diversification to smooth out some of the fluctuations.
The low point for our revenue occurred in the March quarter of 2009, but since that time we have seen a fairly robust recovery across all of our markets.
Our consumer business, which consists of PCs, notebook computers and gaming, was the first to fall and fell the hardest as consumers felt the pinch of the recession. This was followed by our server business, as enterprises postponed spending on server upgrades. Communications also declined year-over-year, but this market proved to be more resilient due to continued investment in infrastructure, which spurred demand for clocks and switches.
2. How is design activity in your OEM customers being affected?
Design activity continues to be robust as OEMs use the downturn to develop innovative new products.
In the consumer segment, Sony's recently introduced thin chassis PlayStation 3, which uses our clocks, tripled our gaming revenue in the September quarter 2009. Design win activity has also been very strong for flat panel displays used in notebook computers, monitors and high-definition TVs.
In communications, we continue to see robust design activity with our clocks, including the ultra-low jitter next-generation Femtoclock that we introduced last year.
3. Can you identify any positives or opportunities in the current climate?
In every crisis there is opportunity. The current economic downturn has offered us an opportunity to reinvent the company, capture market share, acquire companies and technologies, and hire some of the best talent in the industry.
We are using the downturn to develop innovative new products that are now driving revenue growth as we come out of the recession.
Over the past year, we have transformed IDT from a primarily digital, niche product company into a leading supplier of application-optimised, mixed-signal semiconductor solutions for our target markets in communications, computing and consumer.
We have invested in new, growth businesses such as power management, RF and signal integrity. Finally, people tend to become more mobile in their career during times of disruptive change and we have been very successful in hiring some top talent during this downturn.
4. How are you adapting to the changing economic climate?
We have had to balance two competing objectives during this downturn: reduce overall spending levels appropriate with reset global demand and revenue levels; and invest in new products that will fuel future growth. Specifically, we need to fund new initiatives in analogue and power management that are required for next-generation product roadmaps.
To achieve these competing objectives, we have had to optimise our skills mix, downsizing in some areas while increasing investment in others.
5. Do you see any end-markets with growth prospects?
Three areas that we are particularly excited about and are investing heavily in are video, advanced user interfaces and 4G/LTE base stations.
Wherever there is change, there is opportunity, and there is tremendous change going on in our industry right now, driven primarily by the explosion of digital media.
Today, all media - voice, video, data, audio - is stored in digital format. People experience digital media through sight, sound and touch. We are developing products and technologies to support all three of these user interfaces.
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