When times are tough it is time for investment is the message coming out of Texas Instruments in Europe. Investment in products and solutions, capacity, research and resources.
Tony Astley (right), who is director business operations Europe for Texas Instruments Deutschland GmbH in a role that encompasses what could be described as the unglamorous, but nevertheless essential, ‘back office’ functions, provided an overview on how TI is investing.
“We have been investing in products through organic development and also through acquisitions like Luminary and its Stellaris line of 32-bit MCUs. This has catapulted our product portfolio for the embedded processing space from 150 last year to more than 450 next year,” said Astley. TI has already launched another 29 since this acquisition.
While it has been suggested that TI could have developed a similar 32-bit MCU line internally, Astley believes the Luminary acquisition also provided “additional intelligence on how customers use 32-bit microcontrollers as well as the development kits that allow them to be up and running out of the box and writing code in a few minutes.”
This acquisition of knowledge is consistent with TI’s aim to be more local and closer to the customer. “It more that just silicon today it is also development kits, support, its access to manufacturing, financial strength and software libraries. Its all of this not just the devices themselves. It is the knowledge of what the customers really value,” said Astley.
The Luminary acquisition in May 2009 followed another smaller buy in February 2009 when five-year-old CICLON Semiconductor Device Corp. (Bethlehem, Penn.) became part of TI. “This gave us another step function improvement in the power management solutions area based on high efficient FET technology,” said Astley. It provide TI with opportunities in power design in servers, industrial, high-end computing and portable equipment. Nearly a year earlier the company has also boosted its power portfolio when buying Commergy Technologies Ltd. (Dublin, Ireland), a power supply reference design provider that specializes in energy efficient and compact architectures.
As part of its investment in capacity in September TI submitted a bid of $172.5 million for the semiconductor manufacturing equipment from Qimonda‘s factory in Virginia. The 200mm equipment is going in to four existing fabs while the 300mm equipment is to be installed in to its Richardson fab. “This will be the first 300mm analog manufacturing line. Dedicating 300mm wafers to analog gives us a real competitive cost performance/ratio advantage,” said Astley. “This line is due to be up and running by the fourth quarter of 2010.” In the initial phase, Richardson is expected to support about a billion dollars per year of incremental capacity for TI when fully operational.
To address bottlenecks in assembly/test it has also opened a 800,000-square-foot assembly/test facility ahead of schedule in the Philippines with over 400 additional testers are being installed in other facilities.
To back up this capital investment sales need to continue recent improvements. “In both the western and eastern Europe we have been investing in both sales and technical support,” said Astley.
“The widening breadth of product portfolio requires extra support. Around three years ago we had 15 sales offices around Europe, today we have 39 with three more planned including Dubai, Kiev (Ukraine) and Ekaterinburg (Russia).” In Germany the number of sales offices doubled/almost tripled during that time.In Eastern Europe, TI was not represented with a sales office three years ago but it identified many smaller and medium-size customers, who need on-site consultancy and native language speaking contacts.
So with more widely distributed TI staff on the ground where does distribution fit in?
“While distributors add a lot of value in terms of relationships with customers, TI’s approach of increasingly providing systems solutions, say an embedded processor with a data converter plus power management, means that the distributors and TI working together give the customer the advantage of logistics as well as direct support,” said Astley. “We have moved away from having a centralized technical support structure, today we have both localized sales and support working hand-in-hand with the distributor.”An indication of the way the European market has its own local approach. “Legislation can be a massive problem or a big opportunity. We have invested in putting a staff member in Brussels as the European Commission is increasingly interested in technology and how its affects the world.
Astley was directly involved in the appointment for the position in Brussels. “What I wanted was a legal person who could lobby and who was technically competent and also understood business. It involves a bit of everything but it is essentially about business, just having someone lobbying and building relationships for the sake of it does not buy you anything. It is really about providing industry insight to the commission to help them and it is also about understanding the direction that legislation is taking.
In reality Europe is still a hotbed of innovation believes Astley. “Legislation fuels this innovation and creates ideas and opportunities for use to apply our technology and in our back garden we have the growth geography of Eastern Europe and Russia and even further.”The Brussels post was created a couple of years ago. “It has been a very valuable investment on our part and is just another example of the people investment we have made in Europe.”
While traditionally much of TI’s research and developments efforts were on the physics and technology a more recent investment in Kilby Labs (see sidebar below) is in the research of the application of technology.
Astley says many of these applications ideas are coming out of Europe. An example of this is Lemnis Ligthing (Almere, The Netherlands), a leader in sustainable lighting with LED technology. “This is just one example where our customer-supplier relationship has enabled us to identify possible developments that can drive projects at Kilby Labs. We tend to look for markets and customers that are fast growing and will bring benefits to both us and the customer in the future. Where we identify a cluster of opportunities we will feed that in – these could be developments such as solar energy, metering, security and LED lighting. You end up with research that is driven by business.”
So is the future bright? “Trying to predict our industry is impossible,” said Astley. “TI’s position in terms of its investments, its product portfolio, its deployment of people and its financial control is to invest in growth areas. We will maintain an operational position that will allow us to continue that strategy whether the economy booms, stays flat or goes down. Kilby Labs was launched in September 2008 on the 50th anniversary of the development of the integrated circuit. The innovation center at the company’s Dallas North Campus is focused entirely on delivering breakthrough technology to replenish TI’s product pipeline in areas such as medical, low power, public safety and energy efficiency. It is looking at problems it can impact in a 3 to 5 year period.
TI is expanding its R&D efforts by taking a more modern, team-focused approach and there are from 12 to 20 projects in progress with small teams of engineers with design, process, circuit and packaging experience. In some cases, there may be collaboration with university researchers on specific projects as well. These team members are expected to move back into the business unit upon completion to drive successful projects into the business.
Projects will consist of highly innovative and disruptive product ideas several generations ahead of where our current product teams are focused today. The research conducted in Kilby Labs is intended to rapidly demonstrate highly innovative and disruptive product ideas on silicon, developed so as to demonstrate proof-of-concept before the successful projects are passed back to the businesses to further define, develop and market.
Naturally there is little public information on projects at the labs but an indication can be gleaned from a recent Wall Street Journal interview in which Ajith Amerasekera, director of TI’s Kilby Labs indicated that one of the projects is for components for solar lanterns powered by photovoltaic roof panels. The lanterns, which would use TI chips, could replace the kerosene lamps used by millions of people in India.
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