Like the computer-generated "fractal art" popular in the early 1990s, the
patterns now imprinted on microchips seem to subdivide into infinity. It is easy
to forget that each cat-hair strand is a power line: a nano-version of the
high-tension lines linking dynamos with the cities they serve. Surges and
transients can black-out a city. More humble episodes can turn a notebook
computer into an expensive paperweight.
Supplying and conditioning the power consumed by ever more fragile on-board devices, while protecting them from transient voltage, is the business of Semtech Corp., Newbury Park, CA. The company designs and manufactures a wide variety of components OEMs specify to power and protect their own products. The 1990s have seen ever more powerful computers and telecommunications equipment arrive in smaller, portable configurations. This has boosted Semtech's profile from a niche component supplier to a key partner in the design of some of the hottest products on the market.
Semtech has been around since 1960, mostly serving the analog electronics needs of the Pentagon. The collapse of DOD budgets sent brown-outs through the ranks of defense component suppliers. Where this shut down many vendors, Semtech engineered a successful conversion from a military-oriented to a commercial-oriented business. In 1993, the year the company had a net loss of over $100,000, nearly 75% of Semtech's business was with defense and aerospace customers. In FY 1997, more than 75% of the company's business is commercial and Semtech made over $7.5 million in net income.
Even more impressive is the fact the dollar value of Semtech's military and aerospace business has remained fairly constant over this period of rapid change. Thus, the market for Semtech's products has expanded dramatically, particularly in the computer and telecommunications areas, but not at the expense of its previous customers. In this the company has been fortunate.
"Our job is to deliver power from the source to the user with a minimum of transients," says John Poe, president and CEO of Semtech. "The challenge is to stay ahead of the trend toward smaller and smaller geometries and decreasing power consumption of on-board devices."
Industry conversions. The smaller, more specialized on-board devices individually require less voltage and, at the same time, are more sensitive to power transients. Power supplies and converters take current flowing onto the board and distribute it to the devices they serve at the appropriate levels. Power protection systems insulate the devices from surges in power levels that otherwise would damage or destroy them. A wide range of phenomena can cause these surges, from lightning to "carpet-shock" electrostatic discharge. Also, some countries and regions experience "normal" fluctuations in power quality that could damage computers and telecommunications equipment.
Semtech stays ahead of trends with aggressive, proactive design engineering and full in-house manufacturing capabilities. The company has design centers in Newbury Park and Santa Clara, CA, and Corpus Christi, TX. The latter two are co-located with silicon wafer fabrication labs. An assembly and test facility is located across the boarder from the Corpus Christi plant in Reynosa, Mexico. In addition, Semtech maintains a value-added manufacturing facility along with its European sales and marketing organization in Glenrothes, Scotland. Assembly contractors throughout Southeast Asia round out Semtech's worldwide presence.
According to Poe, a worldwide perspective is essential in his business--and not just for the usual advantages of local marketing perspectives and economic manufacturing and assembly opportunities. In much of the developing world, cellular networks are first-generation telecom systems. Semtech has identified the cellular phone marketplace as an important area for future growth. The European Union has rigorous standards for surge protection, and Semtech's European presence helps the company compete in that market.
Gene Krzywinski, director of technical marketing, points to a number of "coincident drivers" in the marketplace that are fueling demand for Semtech's technology. "Every time a new electronics product is invented, there is another opportunity to redesign the integrated circuits that serve them," he says. "Designers are constantly striving to add more functionality while generating less heat. We help make that happen."
One class of Semtech's power-management solutions "step down" input voltage to the operating voltage of on-board devices. Another product family "steps up" battery voltage to extend battery life. Semtech produces battery chargers to ensure batteries recharge smoothly, particularly important for sensitive lithium batteries. But perhaps the most important group of products include the transient voltage suppressors (TSVs) that shield electronic systems.
"The volume of our business exploded when requirements for on-board devices went below 5 volts," says Krzywinski. "We were in the right place with the right products at the right time."
Being in a position to capitalize on good fortune requires good planning. President and CEO Poe has piloted Semtech through a half-decade of rapid expansion. Last year saw the acquisition of ECI Semiconductor, Santa Clara, and with it a flexible silicon wafer foundry. This permitted Semtech to offer its customers a greater range of bi-polar linear and CMOS arrays as well as standard linear power circuits.
James Preston, director of engineering, credits the flexibility of the facility and the talent of its workers with Semtech's ability to respond quickly to market opportunities. "If the equipment we use isn't exactly state of the art, our people know how to get the most out of it," Preston says. The company is replacing some of the more antiquated production equipment with modern, automated systems. Nevertheless, Preston stresses that people ensure the high quality of Semtech's products. "Some of the staff has been in the business for over 20 years, and you can't replace that kind of experience," he says.
This year, Semtech met Poe's goal of doubling the design staff, much of which is located at a new design center next door to the acquired production facility. Four shifts work 24 hours a day producing and inspecting semiconductors. Currently, Semtech's production facilities worldwide are at 70% of capacity.
Ensconced in the heart of Silicon Valley, the Santa Clara design and manufacturing center provides direct access to the support infrastructure of design talent and market opportunities in the San Francisco Bay area.
"The new design center effectively co-locates the bulk of our design and manufacturing personnel," says Dave Anderson, vice president of IC design & development. "We take advantage of this with Friday morning meetings of our design and manufacturing staffs."
Anderson identifies Semtech's ability to bring products with minimum complexity to market quickly as key to its success. The joint design/manufacturing meetings are intended to acquaint all with the up-to-the-minute status of projects and the challenges they impose. This way, problems in each area can be dealt with as a team effort.
Semtech's expansion strategy has involved recruiting designers and engineers with experience and a proven track record. The veterans are intended to form a cadre to which younger talent can be added. "We're starting with senior designers that have experience and depth," Anderson says. "Semtech wants a balanced group with a good span of different backgrounds."
Such a staff will enable Semtech to read the roadmaps of the diverse industries it serves in order to drive future profits.