Microchip takes lead over Motorola - East Valley Tribune: Business

Microchip takes lead over Motorola

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Posted: Tuesday, July 8, 2003 12:10 am | Updated: 1:47 pm, Thu Oct 6, 2011.

Microchip Technology, a fast-growing Chandler-based semiconductor company, has passed Motorola to become the world’s largest supplier of 8-bit microcontrollers, a key device used in many household products, autos, industrial and office automation and telecom equipment.

Motorola officials said Monday that their company still ranks No. 1 in overall microcontroller production and No. 1 in revenue in the 8-bit segment because the company has concentrated on more expensive chips at the higher end of the market.

Microchip president Steve Sanghi said he expects his company will eventually exceed Motorola in 8-bit revenue as well as number of units produced.

“Over the past decade, our dollar ranking has trailed units by a few years,” he said. “We have already moved into higher-end products, but it may take a couple of years for our customers to incorporate them into their new designs.”

Sanghi said the company also is moving into more complex 16-bit and 32-bit microcontrollers, where Motorola is strong.

The production and revenue figures are based on data provided by Gartner Dataquest, a market analysis firm that tracks the semiconductor industry.

In a report released last week, the company said Microchip held 16.1 percent of the world’s 8-bit market in 2002, up from 12.5 percent the previous year. Motorola’s market share was almost the reverse, down to 12.8 percent in 2002 from 16 percent the previous year. The world 8-bit market amounted to about $3.9 billion last year. In comparison, the 16-bit market was $2.7 billion and the 32-bit market was $2.1 billion.

For Microchip Technology, the quest to become No. 1 took a dozen years. Microchip ranked 20th in worldwide unit shipments in 1990, when the company entered the market, rising to eighth in 1993, fifth in 1996, second in 1997 through 2001 and finally No. 1 in 2002. Today, Microchip has annual sales of $640 million with more than 40,000 customers worldwide. Sanghi said 8-bit microcontrollers will continue to be a growing market because of their popularity in consumer and other goods.

Microcontrollers are in products ranging from alarm clocks, to hair dryers to thermostats to TV remote controls to hotel room door locks, he said. An average consumer encounters more than 100 microcontrollers every day without realizing it, he said. The 16- and 32-bit controllers are used for more complex applications such as fingerprint matching and speech synthesis, he said.

But for many uses, 8 bits provides sufficient capability, he said. The bit number measures the number of instructions the chip can perform. The higher the bit number, the greater the capabilities of the controller. Motorola is introducing microcontrollers in the low-cost range of the 8-bit market to strengthen its position in that segment, said Peter Schulmeyer, director of strategy for Motorola’s Transportation and Standard Products Group, which includes microcontrollers.

“Our strategy has not been to go after the low-end market, but that has recently changed,” he said. “This year, we are aggressively going after all segments. I’m sure we will collide with Microchip more often.”

That strategy is paying dividends, Schulmeyer said. In the first quarter of this year, Motorola’s 8-bit sales were up about 10 percent over the same quarter last year while Microchip sales were about flat, he said. Will Strauss, a Tempe-based technology analyst, said Motorola has the size and marketing power to bounce back with its new line of low-end 8-bit microcontrollers.

“This could reverse if they put their resources in the right place,” he said. “They are bigger and have more financial muscle.”

But he added that Sanghi has proven to be effective in moving his company into markets that Motorola and others didn’t reach. “It was a company that was going nowhere, and Steve gave it focus. I have to attribute (Microchip’s success) to his leadership.”

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