Ted Tewksbury, who's been CEO of IDT for five months, can sum up where he's taking IDT in four words: "Digitally intensive mixed signal."
What does that mean? "Most mixed signal is taking analogue functions and tacking on some plebeian digital functions", replies Tewksbury, "IDT is not intimidated by complex digital functions like LTC or Maxim which can't do that. It opens a whole new arena of opportunity. Usually the guys who do the analogue can't do the digital and vice versa. When I was working at Maxim we were turning away applications because, though we could do the analogue, we didn't have the sophistication to do the digital side."
Tewksbury's growth strategy for IDT gets going, in earnest, next quarter. Although he's not averse to growth by acquisition, he prefers organic growth.
"When I tell analysts I'm going for organic growth they look at me as though I've got three heads," says Tewksbury.
So how does he get organic growth? "We target the top individuals in the industry and go out and hire them", replies Tewkesbury.
He's done it before. "When I joined Maxim, they had no high speed data conversion business", recalls Tewksbury, "Gifford (Jack Gifford, Maxim's founder and former CEO) gave me an office and a phone, and said: 'Build me the world's best high speed data converter group'. Five years later we had the broadest portfolio of A-Ds and D-As in the industry."
How did he do it? "We asked: 'What are the best products in the industry?' And then we asked 'Who designed those products?' And then we went out and hired those guys", replies Tewksbury.
Isn't it difficult to identify the designers of particular products? "Not if you're tapped into the industry", responds Tewksbury.
How does he get the star designers to switch jobs? Does he have to offer a fortune? "It's never about the money. It's always about the mission", says Tewksbury, "you've got to have some compelling mission."
He accepts that money has importance, and is working on a performance-based stock option scheme for IDT designers, but adds: "Recognition is important for engineers. When I worked for Analogue Devices (as an analogue IC designer) my ambition was to be an ADI Fellow, and I want to establish corporate Fellowships at IDT."
Once he's hired the industry's star designers, he will set them up in design centres. "Great people attract great people", says Tewksbury, "the people coming out of school want to be apprenticed to the masters."
So how is the recruitment programme going? "I'm talking to a lot of heavy-hitters. I haven't brought them on-board yet, not till the organisation is in place. We need one more quarter to put in place the organisational structure."
The new organisational structure involves moving IDT from being organised around individual products in eleven niche areas, to being organised around five application areas.
Why? "We're making 53-54 per cent gross margins and 20 per cent net margins with good cash flow but we weren't growing fast enough", replies Tewksbury, "and that's because of the strategy. If a guy is only focussed on clocks, he looks at a board where there may be a million dollar opportunity, but he only sees clocks. So we're focussing on end market applications, and systems expertise."
The five business areas are: 1. Base stations and wired communications 2. Networking - switches and routers 3. Enterprise - storage and servers 4. Digital displays 5. Multi-media.
These sorts of areas require systems knowledge. "We bring the knowledge of both the system and the IC", says Tewksbury, "you have to have system level expertise that's at least as good as your customers."
How do you acquire it? "The same approach allowed me to build a base station business at Maxim,", replies Tewkesbury, "I hired system architects from the end-user. I hired base station designers out of Siemens and Motorola. Those guys were able to get me in the door to see the base station manufacturers."
Tewksbury reckons the semiconductor industry needs to consolidate. Why? "Because there's no growth in the industry, no one's stock is rising", he replies, "the only thing short of a new technology, or a new killer app, that will get Wall Street excited, is consolidation."
He reckons the companies will align in two ways. General purpose, standard product companies selling non-differentiated, commodity products will get together to produce economies of scale.
Secondly, companies will coalesce around systems solutions with various companies providing different aspects of the solution getting together.
A new killer app, or a new technology, sounds a lot more fun.
See also: Mannerisms, the blog of David Manners. Updated twice daily, it's the distinctive, entertaining, authoritative and never dull commentary on the semiconductor industry, from someone who knows. Sign up for the Mannerisms eNewsletter.