2012 Strategies for Enabling Profitable Growth: Increasing Design Wins and Gaining Channel Mindshare

Chanan Greenberg, Senior Director, Business Development, Model N
Marc Gsand, Senior Director, Worldwide Channel Sales, AppliedMicro

Semiconductor and electronic component manufacturers are bracing themselves for the uncertainties that 2012 holds. Much has been said about the cyclical nature of the semiconductor business, yet there are significant differences between recent downturns. The 2001 downturn was driven primarily by high inventory levels and a sharp drop in demand, which led to a significant investment in supply chain management processes and tools. This investment paid off when credit dried up during the 2008 financial crisis, allowing companies to respond quickly and enable a fast recovery in 2010 and 2011. This time, the driver is different; sovereign debt in both the U.S. and in Europe is unnerving markets, but unlike 2008 when the scope of the problem was unknown, the scope is well-defined and corporate balance sheets are actually doing well. It is for these reasons that analysts are predicting a soft start to 2012 and a return to moderate growth by the second half of the year.

The open question is what can semiconductor and component companies do in 2012 to allow them to grow their business profitably and install an infrastructure that will enable them to gain more market share in 2013 and 2014?

Seizing the Emerging Silicon Opportunities Created by Vertical Integration

Phil Bishop, Corporate Vice President, Worldwide Marketing, Magma Design Automation

All technical product markets evolve to provide differentiation and variety for the end customer. This evolution often involves a period of increased vertical integration in an attempt to control the customer experience and provide all the necessary elements of a product's supply chain. Looking historically at the personal computer market and most recently at Apple and Google in the mobile market, the aggregation of software, silicon, services and sometimes patents in an attempt to control the customer experience takes place. This level of vertical integration usually signals that a market is seeking to stabilize the customer experience and will enter a period of rapid growth. This period of growth can also lead to unique challenges and increased opportunities for emerging silicon providers and their partners. In today's technical markets, vertical integration of an end product means greater emerging silicon integration of complex analog and digital mixed-signal technology. Success in these technical markets favors design software suppliers who can provide fully integrated solutions to these ever-increasing silicon integration challenges.

Vertical Integration and Technology Market Evolution

Early in the evolution of technology markets and before a full range of contributors emerge to create a supply chain, some of the market players will inevitably attempt to vertically integrate. This vertical integration involves encapsulating all of the product development and product integration under one company. Vertical integration can lead to a more uniform customer experience, a reduced development schedule and the improved coordination of a complex product development. On the downside, vertical integration can lead to higher costs since not every step of the supply chain experiences competition. Vertical integration can also lead to a decrease in product variety if the vertically integrated company driving the end product lacks investment capital. As a technology market further stabilizes, a period of specialized integration begins. At this stage, market participants understand the needs of the customers and emerge with specific core competencies such that the end product can be created with highly optimized components. Finally, as a market matures, the virtual integration state is reached. Here a single company will often manage a tightly coordinated supply chain to allow for the greatest degree of product variety and cost tradeoffs.

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December 2011 GSA Forum

RAYMOND D. ZINN
President, Chief Executive Officer and Chairman of the Board
Micrel Semiconductor

GSA's membership base is made of companies that have established innovation as part of their business culture. One such GSA member is Micrel Semiconductor. Their tagline "Innovation through Technology" reinforces their commitment to driving innovation for its customers. GSA sat down with Raymond D. Zinn, president, CEO and chairman of the board at Micrel Semiconductor, to discuss some of Micrel's new, innovative analog, Ethernet and high-bandwidth solutions and how these products drive innovation for its customers; best practices implemented by Micrel to enable the company to be "fast on its feet"; which electronics markets they see as rich areas for semiconductor innovation, and much more.

BOB CONRAD
Executive Vice President
Fairchild Semiconductor

Innovation is the lifeblood of the semiconductor industry. Consumers continually demand more features, efficiency and reliability, requiring chip companies to constantly innovate to remain competitive and meet demand. No one knows this better than industry veteran Fairchild Semiconductor. GSA sat down with Bob Conrad, executive vice president at Fairchild Semiconductor, to discuss the major turning points of change and innovation in the semiconductor industry during the 54 years of Fairchild's existence; the company's new, innovative high-performance power and mobile products and how these products enable engineers to drive innovation in their designs; the importance of investing in innovation inside and outside the company, and much more.

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