Q: Dialog Semiconductor experienced exceptional growth in 2008 (increasing 86 percent YoY) when many companies fell short. What business strategies enabled Dialog to remain profitable throughout 2008, and what factors allow the company to be optimistic about revived growth?

A: Dialog experienced significant growth last year and will continue to do so because of three main factors. First, we are responding to customers’ needs better than our competitors, particularly in our focus growth areas of smartphones and portable media players. By developing products with the highest levels of mixed-signal functional integration for power management with the lowest power consumption, we are responding to their needs to develop smaller products that enable longer battery life. Secondly, we are large enough to be seen as a credible player by Tier 1 companies that develop mobile devices, but small enough to remain agile and responsive; once a product specification is agreed, we bring it to market very quickly. Finally, we are still a relatively young player in this industry, so we have huge growth potential.

Q: In the past, to sustain its competitiveness in the global semiconductor industry, the European chip industry relied on government support; however, with a number of other industries requesting assistance, the European government is not investing the same amount of money into the semiconductor industry as before. Therefore, what precautions can semiconductor companies take to ensure that innovation continues and market share is not lost? How can Europe reestablish its competitiveness?

A: I believe that local government investment is not the most important factor in revitalizing Europe’s semiconductor industry. Regardless of location, thoroughly understanding the needs of customers and swiftly and effectively responding to their needs is the catalyst for semiconductor companies to achieve great success. At the same time, companies need to review where their core competencies lie and divest those that add no value. For example, Dialog outsourced manufacturing because it was not a source of competitive advantage.

Europe’s industry experience and engineering expertise, particularly in analog/mixed-signal design, give Europe a competitive advantage. Dialog continues to recruit European talent, and we invest in selected locations to attract the best employees for our company.

Q: Analog/mixed-signal design is still more art than science. What are EU chip manufacturers, universities, research consortiums, etc. doing to advance analog/mixed-signal technologies, such as what has been achieved in the digital arena, i.e. chip design at leading-edge technology nodes? What can the ecosystem learn from the digital experience?

A: Europe’s universities are producing many talented, young engineers in the analog/mixed-signal area, and companies are hiring them for their unique skill set. Dialog currently partners with many of these leading universities. Additionally, GSA’s Analog/Mixed-Signal Interest Group has brought together many key players in analog/mixed-signal design, electronic design automation (EDA), manufacturing and test to examine the industry’s challenges and develop solutions.

It is important not to confuse digital and analog/mixed-signal design with respect to leading-edge technology nodes. Analog/mixed-signal will always lag in this respect due to fundamental physical effects that make analog signal processing very difficult at smaller nodes. This does not mean that it is not advanced analog design. It is just not done at 45-nanometer. The lessons taken from the digital experience are not related to sub-micron manufacturing, but include how to be more effective in design re-use and how to develop standards for interfaces.

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Q: With consumers continuing to rank voice as the number-one application for mobile phones, voice communications is clearly an attractive market to chip companies. To maintain its competiveness and create value for its customers, how does Audience’s processor bring voice quality to mobile devices? Do you see consumer preferences changing in the near future?

A: Audience’s processor brings voice quality to consumers’ mobile devices through removing environmental noise from conversations or mitigating its effects. Our technology, which is based on the human hearing system, allows cell phones to ignore background noise and entirely focus on the speaker’s voice. Audience’s cell phone chips guarantee high-quality voice communications regardless of a speaker or receiver’s noisy environment.  Audience accomplishes and performs these voice quality miracles by using hardware acceleration. There are competing methods of solving voice quality problems, but they tend to be simpler, looking at only the difference between two microphones. The human system relies on many different criteria to differentiate between signal and noise. It’s a very powerful system that is computationally intensive by its unique representation of sound. Semiconductor technology is a key part of our solution and wouldn't be possible without a custom chip, which is why Audience is a fabless chip company and not an algorithm software company.

We feel Audience's technology will play a big role in shifting consumer expectations. Today, consumers tend to not place calls in noisy environments because they know their phones aren’t immune to noise, and therefore must drop calls voluntarily. We predict their expectations will change as they experience high-quality voice communication in noisy environments through the use of Audience’s technology. They will begin to expect noise immunity when using their cell phone.

Q: Rapid technological change has increased consumer expectations, which means companies must continually innovate. However, companies can no longer spend large sums of money to remain competitive. How has this barrier impacted Audience’s goal to revolutionize the mobile phone market? What is Audience’s plan for research and development (R&D) in the next year?

A: Audience will continue to expand its investment in R&D since that is what it has been funded to do. The company’s operating plans are built around on-going investment and innovation, and the firms that have funded Audience share our belief that there is a high return to be gained from investment in Audience. Furthermore, since Audience is a small, highly focused company, we are more productive in our R&D investments than larger companies. We have the advantage of providing a very tight coupling of R&D resources to customers in a way that’s difficult for larger organizations.

Regarding future R&D plans, as previously mentioned, we will continue to invest and increase our investment in R&D to not only enhance our basic signal improvement capability, but to also identify new applications that could take advantage of this capability, such as making speech recognition robust to noise.

Q: In December 2008, Audience was nominated for GSA’s Start-Up to Watch Award. Since receiving the nomination, how has Audience continued to demonstrate the potential to positively change its market through the innovative use of semiconductor technology or a new application for semiconductor technology?

A: Audience has continued to demonstrate its potential and build on early success by gaining additional market traction with customers over the past few months, proving that our technology and the way we bring it to market is scalable. We are transitioning from initial successful engagements with early customers to customers incorporating our technology throughout their portfolios, validating that this powerful technology can be brought to the masses.

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