Maxim goes on a diet
Maxim Integrated will continue to focus on power management IC markets where the company already has considerable strengths, said Tunç Doluca, the company’s president and CEO, at an investor’s meeting (February 10). These power-intensive markets include automotive and industrial electronics, data center power management, mobile electronics and wearables.
But penetrating these markets may be hampered by cutbacks in R&D spending, and the disarming of potentially useful analog fabrication facilities. With the IC industry currently in the process of consolidation, both size and incumbency are enablers for continued growth. The company must polish its balance sheet if wants to attract investors.
Maxim is targeting the right markets, insisted Doluca. Maxim’s revenues in automotive electronics, data centers, and industrial power grew 18% per year from 2012 to 2015. Maxim’s revenue in the automotive power sector grew 43% per year in the same period. Continued growth in these markets is most almost a certainty, the company suggested.
What Maxim brings to the party is enviable strength in power management ICs: voltage regulators, AC-to-DC converters, DC-to-DC converters among standard analog building blocks; multi-function PMICs among the custom analog components. Maxim is currently the third largest analog IC supplier, behind Texas Instruments and Analog Devices, and number two in the standard power management market behind Texas Instruments. To continue to succeed in growing its revenues, the Company will need to identify specific analog circuits demanded in each market, engineer them with competitive feature sets, and manufacture them efficiently.
$100 per car
Automotive electronics, for example, is now 17 percent of company’s revenue. Looking forward, Maxim sees a 9 percent CAGR from 2015 to 2018; a revenue opportunity of up to $100 per car. The specific part types in demand include battery management devices (for the multi-cell lithium-ion batteries used in electric vehicles), serial links (for data-laden automotive buses), external LED lighting drivers (for head lamps and tail lamps) and power distribution circuits. Serial link supports ADAS cameras and hi-res displays. Smart keys are an additional market opportunity for Maxim.
Industrial electronics, requiring high-voltage controllers, now account for $600 million of Maxim’s revenue. The projected market growth is 7% CAGR—from $8.4 billion in 2015 to $10.4 billion in 2018—with factory automation serving as the largest industrial market segment, and its fastest growing. Maxim makes parts for Programmable Logic controllers (PLCs), including pulse width modulators for motor drive, precision op amps, and the ever popular RS232 interface transceivers. Servicing the industrial market also requires the company to make its high-end products more accessible to smaller industrial customers. And this signifies a greater role for Maxim’s distributors, primarily Avnet.
In data center power management, the enterprise computing segment did not grow as rapidly as hoped for in 2015. But Maxim is satisfied with the positon it has in data center power management. The server power management ICs (multi-phase power controllers), acquired with Volterra, supports 20% greater power densities. The efficiency improvements provide aggregate savings in millions of dollars.
Maxim sees mobility and wearables as a $12 billion opportunity. The CAGR for wearables – consumers of power managers, audio decoders and amplifiers—is 30%; reaching 380 million units in 2018. These include part for smart watches, health monitoring, and fitness devices.
Under mobility, Maxim showcased its expertise in mobile power management ICs, including the highly-integrated PMIC devices that control mobile handsets. It turns out the small size and low power consumption of PMICs are welcome in automotive consoles. A Maxim PMIC currently supports NVidia’s processor and display controller for automotive consoles. The PMIC integrates as many as 14 separate power management functions. Automotive console makers appreciate the small package size enabled by integration, but also the low power consumption—2µA at standby—as this supports an “always on” capability for automotive systems.
While Tunç Doluca did not mention the company’s name – referring instead to "our largest customer" – Maxim’s business with Samsung has exceeded 20 percent for several years. The company’s business with Samsung is currently 17 percent, down from a one-quarter high of 28 percent. The priority is to “diversify,” Maxim said, meaning it will attempt to reduce its dependency on a small number of very large customers.
Maxim’s on-going challenge would be to develop industry-leading products without spiking R&D spending. Tunç Doluca more than once referenced the talented engineers on his staff, but their challenge now becomes to streamline the design process. The company will also elevate the role of catalog products – called the "core technology" – suggesting perhaps that legacy products can be revamped to serve new markets. With lower R&D expenses and a long market life, core technology product (representing $800 million in Maxim’s revenues) may play a role in margin control. Gross margin target is 70 percent.
Going fab-lite
As part of its cost-efficiency program, Maxim will sell off under-utilized fabrication facilities. The sale of its San Jose facility to Apple was completed last fall. While Doluca refused to speculate on what Apple might do with the facility, he did remark that the 75,000-square foot property did not include any semiconductor manufacturing equipment (just a clean room shell). Maxim is also selling a San Antonio-based manufacturing facility, and re-tooling a Dallas bump factory.
Manufacturing efficiencies – up to a 30 percent cost saving – can be obtained, the company insists, by producing semiconductors on 300mm (12-inch) wafers. Texas Instruments was the first analog IC maker to use 300mm wafers in its Richardson, Texas fabrication facility (RFAB). Maxim was the second analog supplier to use 300mm wafers, as early as 2010, with the help of a foundry partner, PowerChip in Taiwan. The products coming out of that facility were primarily power management devices, using a Maxim-propriety BCD process, which implants DMOS power transistors on CMOS substrates.
Now Maxim is hoping to make the 300mm wafer usage standard across the company. Much of the 300mm equipment available for analog IC makers is used equipment, broken in by memory makers. But the use of depreciated equipment, Maxim’s financial officers maintain, serves as a “tailwind” for gross margin accounting.
Also on the manufacturing front, Maxim told its investors it will utilize a 90nm CMOS geometry for its preferred platform. Its denser logic would support new-generation PMICs. The proprietary process—developed in conjunction with an unnamed foundry partner—takes advantage of many years of “deep submicron R&D,” says Doluca. This would be something of a first, since—unlike digital CMOS, whose performance increases with shrinking geometries—analog does not scale. Consequently, custom PMIC makers continue their work in 0.18- and 0.13-micron CMOS. The 90nm process would more appropriately be considered a 2017 platform, Maxim acknowledged, as a very small proportion of the company’s production use the process now.
Stephan Ohr is a former director for Semiconductor Research at Gartner, where he tracked analog and power management ICs with forecasts, market share analyses, and client advisories. Prior to his 10 years at Gartner, Ohr was founding editor-in-chief of Planet Analog and an editor on EE Times.
This article originally appeared on EE Times
Related links and articles:
www.maximintegrated.com
News articles:
Report: Analog, TI both pass on Maxim purchase
Tower buys Maxim’s Texas wafer fab
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Maxim exits consumer MEMS, touch sensors
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