The semiconductor market in the last decade has experienced two "once-in-a-lifetime" events: the dot-com bust and the global economic crisis. The coming year will bring a return to reality for the global semiconductor market, no longer driven by bubble economics that fostered the illusion of wealth.

The real driver of global economic growth will no longer be consumers, but rather emerging markets and economies that need infrastructure. So future growth will not be dependent on disposable consumer production.

These important market changes have benefited Linear Technology. The company has been repositioning its product development, manufacturing and sales away from consumer markets in favor of industrial, communications and automotive markets. This repositioning is nearly complete, and has enabled Linear to boost sales faster than before to the current recession and will accelerate sales as we exit the recession.

This company-wide repositioning is clearly reflected in our sales by market segment when comparing 2005 results with our forecasts for 2010. Handsets and consumer markets in 2005 accounted for 28 percent of sales, but in 2010 will only be 9 percent. Sales into industrial, automotive and military/space markets were 42 percent of sales in 2005, and are forecast to be 59 percent in 2010.

The remaining portion of our sales are in the communications and computer markets, which in 2010 will account for 32 percent of sales. This new market alignment has our product revenue concentrated in the markets that will be the analog technology growth drivers.

New automotive opportunities

Automotive has for several years been an area of market and product focus for Linear. The increasing electronic content in vehicles, boosted by new hybrid and all-electric vehicles, will be a significant growth driver for the overall electronics market.

By 2012, electronic content in cars will constitute 15 percent of a new vehicle's cost, and will continue to grow. We are now seeing the early wave of new electronic applications in vehicles, including security/safety, LED lighting, navigation/entertainment, collision avoidance radar, battery management and engine control.

This is just a small sample; complex electronics are no longer reserved only for the most expensive vehicles, but will make their way into many applications that will be required in all vehicles.

One might ask, Will a growing automotive electronic market attract more competitors and evolve into a commodity market like consumer electronics? This is an unlikely scenario for automotive electronics. The electronic content in vehicles is in a state of high innovation, there are countless applications, with few standards, and the requirements for quality and reliability are not achievable by many semiconductor suppliers.

Products need to operate over wide temperature ranges under the hood and extreme voltages, ranging from under 4 volts at cold crank to over 60 volts under load dump conditions.

Green power, energy efficiency

What is green power and what does it mean to the industry? Green power is nothing new to Linear. We were designing products with high efficiency that minimize thermal issues and provide low quiescent current long before anyone coined the phrase "green power."

In the last several years, all of our markets have been demanding products with increased efficiency. The ever-present threat of higher energy costs will maintain pressure for energy efficiency, which will further drive infrastructure upgrades that will create many new product opportunities.

Energy efficiency and power consumption are critical factors in today's electronic designs. With many different voltage rails supplying large load currents, managing power consumption and optimizing overall efficiency can be a challenge. Our family of power supply monitors and controllers allow users to select the sequence of power supply ramp-up and ramp-down while controlling the outputs, including support of DC/DC converter modules.

Linear has just introduced a new family of products able to harvest energy from the environment. Our first product extracts energy from a thermal electric generator or similar sources. An integrated power management control provides the power to charge, supplement or replace batteries in systems where battery use is inconvenient, impractical, expensive or dangerous.

It can also eliminate the need for wires to carry power or to transmit data.

Energy harvesting can power smart wireless sensor networks to monitor and optimize complex industrial processes, remote field installations along with heating and air conditioning systems.

There is now a sense that the world economy has turned the corner. The best indicator is our business in Japan and Asia, which is now returning to or even above the peak prior to the recession. What remains to be seen is what shape the recovery will take—a U, W or V—and the robustness of the recovery.

The semiconductor industry is emerging from the bottom of this cycle with lean inventory and capacity. During the recession, many companies have reduced or even eliminated semiconductor capacity. We decided to keep our team together during the downturn, and this strategy is paying off as business improves. This strategy allows us to maintain two- to four-week lead-times, whereas competitors who reduced their capacity have longer lead times, some beyond 30 weeks.

We are again entering a period of growing demand for electronics. Driven by the downturn, chip makers are operating their new product development efforts on overdrive. Our customers want innovative products that will allow them to achieve end-market differentiation. I believe we are positioned to do well in this environment.

By: DocMemory
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