Touch user interfaces have made significant advances in the consumer electronics market particularly for mobile phones and notebook computers, opening the door for adoption in other applications including white goods, computer peripherals, medical equipment, and instrumentation. Synaptics made its debut in the home appliance market earlier this year with the launch of the Samsung Hauzen ZERO air conditioner.
The standout products on day three of the SID 2010 conference is Universal Display's new PHOLED display architecture with a unique four-color, sub-pixel design, which promises to drive commercial development of all-phosphorescent active-matrix OLEDs and Sony's tiny rollable OLED display that can wrap around a pencil.
Smaller distributors were the only ones to post sales gains in 2009. Interestingly, two of the five distributors that posted growth last year -- Interstate Connecting Components and Sherburn Electronics -- derive 100 percent of their sales from interconnect products. Both of them also target the military/aerospace industry. Here are the top 10 sales leaders by ICs, passives/electromechanical devices, interconnects and computer products as well as sales growth.
Weathering the recession storm, Part 4
Fairchild Semiconductor protects key R&D programs, stays focused on energy savings
If there is one thing that leading suppliers in the electronics industry agree on is that the downturn hit fast and steep. As a result, most suppliers moved quickly to reduce cost by consolidating plants, cutting their employee headcount, and pruning product lines. However, most suppliers tried to keep their research and development investments intact, particularly for key projects. Here’s our fourth interview with Allan Lam, executive vice president, worldwide sales & marketing, Fairchild Semiconductor.
Editor: What have been your biggest strategies for business survival during the downturn?
Lam: We saw things falling off the cliff in the mid to late October timeframe. We worked very hard on our cash flow. It was our number one strategy to survive this downturn. Almost every company has prepared to lose money, but cash flow preservation is our top priority.
At the same time, we wanted to come out of this downturn stronger. We did a lot to protect our research & development programs. Even with all the cost reductions, we have managed to protect all of our key R&D programs. We also leaned our channel inventory dramatically– nearly $80 million in the first two quarters.
We also needed to stay close to our customers. The sales force has to stay very focused and motivated. Every day they face bad news so we pay a lot of attention to the sales force to help them stay focused and close to our customers. This is a time when they are willing to try different and new solutions.
We also continue to focus on energy efficiency and mobile connectivity, investing in solutions that would differentiate us in those areas and have continued to announce new products. As an example, our new RF amplifier circuitry.
We have reduced our workforce by between 12 to 15 percent, and announced the closure of our Mountaintop, Pa., facility as well as the closure of the 4-inch facility in Korea.
[Editor's note: Fairchild Semiconductor announced the two wafer fab closures in March 2009.]
Editor: Have you or do you plan to shift your product focus as a result of current economic conditions? In which areas?
Lam: We did not. We have a long running and successful strategy supplying energy-saving products for consumer, industrial, computing, communications and mobile markets. Getting close to our customers in these areas has been the driving initiative over the past few years. That has allowed us to develop products that directly meet our customers’ requirements in a very timely way.
Editor: Are there beginning signs of a possible recovery in the second half of 2009?
Lam: The industrial market has been one of the worst hit during this downturn, but we see, for example, the LCD TV and mobile computing markets doing quite fine. Mobile communications and handsets slowed during the first two quarters but we have seen signs that the mobile communications segment is picking up a little bit. We believe we’ve seen the bottom and are seeing at least stabilization in multiple product markets.
Different geographical regions perform differently. Asia being the strongest, started to recover or rebound from the bottom in the second quarter. The American market has bottomed out and is stabilized now. Europe is still a little bit weak with the third quarter hitting the traditional holiday season.
Editor: What will be the biggest drivers of future demand?
Lam: Energy preservation is one of the biggest drivers and mobile connectivity is another one. We are seeing convergence between mobile computing and mobile communications. We see phones getting smarter and computers getting smaller and emphasizing connectivity. Those are areas where we’re paying a lot of attention to for both power management and connectivity with our mobile power products and interface devices.
Energy preservation comes in a lot of different forms. We participate in a lot of consumer electronics applications on the power supplies, and because our products address specifically things like AC to DC conversion we target a lot of motion control applications.
Of course, the automotive industry is badly beaten up, but we see them coming back. The automotive industry as a whole may not expand a lot but the use of electronics in automotive applications will continue to expand. As we look at the electronics content which is driven by semiconductors, the percentage has been increasing. The automotive market may not be a fast-growing one but semiconductor content will continue to grow.
Editor: Which emerging markets, including renewable energy, show promise as potential growth drivers over the next few years.
Lam: Renewable energy is the latest and hottest topic on energy preservation. We are actively participating in areas like solar and wind in the area of DC to AC conversion and protection circuitry. The reduction of energy waste is an existing and future opportunity. Smart grid and smart metering are also part of our focus.
In this downturn, we observed a lot of the government aid for infrastructure aimed at renewable energy so we believe that will continue to be a driver.
Editor’s note: Fairchild Semiconductor recently announced results for the third quarter ended September 27, 2009. Fairchild reported third quarter sales of $331.8 million, up 19 percent from the prior quarter and 23 percent lower than the third quarter of 2008.
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