NEW YORK – Microchip CEO Steve Sanghi is a straight talker.
When Sanghi comments on the economy, outsourcing, technology or market trends, you’ll hear very little conventional wisdom or polite evasion. He has no stake winning a popularity contest or looking fashionable.
Sanghi – heading up Microchip for the last 20 years and keeping the company profitable for all these years – stays atop the game by knowing his trade, his company’s 70,000 customers, and perhaps, more important, holding no illusions of what Microchip does.
Tom Starnes, embedded processor analyst at Objective Analysis, believes that Microchip has always done a good job “of making their MCUs accessible to ‘the little guy’ with excellent support and lots of little development kits.” In Starnes’ view, serving the smaller customer is “more of a mission at Microchip,” while it’s often a secondary goal to most vendors who concentrate almost exclusively on their biggest clients.
With
SMSC’s acquisition announced last week, though, industry observers have suggested that the familiar narrative of who Microchip is and what it does could potentially change.
The biggest concern swirling around the financial community now is: How can Microchip – inherently good at serving the vast horizontal market – integrate its business, products, technology and corporate culture with an SMSC whose business is more attuned to vertical market segments, such as automotive, computer and consumer.
In
the MCU revenue share ranking put together by Databeans earlier this year, Renesas (Tokyo) logged microcontroller sales of $2.62 billion in 2011. The Japanese company’s sales remained significantly higher than second-ranked Freescale Semiconductor Inc., which increased its MCU market share to 10.1 percent in 2011 from 10 percent in 2010. Microchip was ranked No.4 after Atmel, which climbed to No. 3 from No. 5 with an increase in microcontroller revenue of 25 percent.
‘We will be much bigger than Freescale in no time’As Microchip keeps buying more companies with technologies such as gesture control and a broader range of wireless expertise and edges toward more mainstream, established automotive and connectivity markets, some even worry whether Microchip will be eaten alive by giants like Freescale, presumably armed with a bigger set of IPs, expertise and product portfolio.
But Sanghi, of course, thinks otherwise.
He dismissed last week the horizontal vs. vertical market argument by noting: “That’s a barrier Microchip crossed years ago.” He further pointed out, “With the SMSC acquisition and the economy bottoming out, before you can blink, we’ll become a $2 billion company [combining Microchip’s $1.4 billion annual sales with that of SMSC’s $412 million] -- much larger than Freescale in the microcontroller space.”
Freescale earned annual net sales of $4.57 billion last year (ended in Dec., 2011) Freescale’s MCUs and associated application development systems generated about 35% of that.
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