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April 11, 2005...Many car makers will be introducing hybrid autos this year and the next. According to a recent article in Forbes magazine, titled, "A Power Portfolio," the companies that make power electronic components will likely prosper with the new hybrid auto market. Among the companies that they mention in their list of good long-term stock picks are Cree, Fairchild Semiconductor, and Ixys. The article points out that the electrical power “massaging” equipment business already makes about $50 billion per year, and that will likely increase with the new hybrid market.
The electrical system in a hybrid is a major portion of the vehicle’s cost with electricity required for the electric motor, brakes, fans, cooling pumps, ignition, electric steering, transmission, active suspension, and many peripheral devices. In fact, one of the authors of the Forbes article interviewed by Larry Kudrow of CNBC, Mark P. Mills, said, “You know at one time the steel industry was the dominant supplier to the auto industry. Now silicon costs more in a car than steel.” In a hybrid auto, the AC power coming from the alternator is quite variable. Each device has its own power requirements. The electricity must be converted to a usable form for each device. This requires no loss power rectifiers, power transistors, and various converters, hence the use of compound semiconductors such as Silicon Carbide (SiC), Gallium Nitride (GaN), and Gallium Arsenide (GaAs).
The article points out that the power that manufacturers’ chips can handle doubles every few years. Now a single chip can switch tens of kilowatts at a relatively low cost. The cost has become affordable in the past few years. The Forbes article quoted Nathan Zommer, Ixys CEO, describing the tremendous advances in the technology. “Twenty years ago no engineers imagined they’d have power transistors at the price, efficiency, and capabilities we have now,” he said. The article also notes that the shrunk and sped up switching of power supplies have allowed their capacitors, inductors, and transformers to shrink. According to the article, the power supplies have shrunk to one-fifth their size since 1994, and they have reached one-third the price.
Fairchild Semiconductor is a dominant manufacturer of insulated-gate bipolar transistors for auto ignition systems and metal oxide transistors (mosfets) for fuel injection systems. Stephen Ahrens, Fairchild’s director of discrete automobile-power products said, “Even when we get to only 5 or 10% of vehicles as hybrids—a niche in the auto industry--, its still a huge deal for the power semiconductor business.” The article states, “In the coming decade look to companies like Cree and Infinion, --and likely the Japanese—to deliver transistors built on diamondlike silicon carbide (SiC), propelling another ten fold improvement in both power density and price.”
Picolight Predicts New Growth in Ethernet and Optics Markets After Receiving $13 Million in New FundingApril 8, 2005...Picolight with headquarters in Boulder, Colorado USA raised $13 million in its latest funding round. Picolight Inc, a dominant designer and manufacturer of optical components, lasers, and transceivers, has received much of this round of funding from Coral Capital Management. This adds to the funding from previous investors BA Venture Partners and Vesbridge Partners. Picolight has raised $90 million in prior capital. First quarter revenues have more than doubled over those of 2004 with much of the growth from the 10G Ethernet and parallel optics markets.
Picolight carries a range of optoelectronic components and lasers to serve networking needs from a few meters to 80km. The company expects growth in the near future in access networks for fiber to the curb (FTTC) or fiber to the home (FTTH) that use 1310nm optics. The company’s high-power 1310nm and 1550nm optics are also used to interconnect access networks and metropolitan switching centers. “Picolight has maintained significant advantages in terms of new and existing 850nm VCSEL based products, ownership of the key sub-components, a strong patent portfolio on VCSEL technology, and 1310nm VCSEL technology leadership in both enterprise, storage area and metro area networks,” said Todd Ortberg, managing director, Coral Capital Management and Picolight board member.
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Nichia Settles Lawsuit With Sharper ImageApril 8, 2005...Nichia of Tokyo, Japan has reached an amicable settlement with USA retailer, Sharper Image in a lawsuit alleging sales of products that infringe on Nichia’s patents for white LEDs. The products purchased from a third-party Asian manufacturer allegedly infringed on NICHIA’s U.S. patent (U.S. Patent No. 5,998,925) that describes a white LED with a nitride compound semiconductor as the light emitting layer and a phosphor. As part of the lawsuit that began in April 2004, Nichia requested that Sharper Image discontinue marketing accused products containing white LEDs. While Sharper Image denies these allegations, Nichia and Sharper Image have resolved the issue and have agreed to enter into a business arrangement. Nichia says it will vigorously protect its intellectual property in any country, and Sharper Image maintains that it will respect the intellectual property rights of others. Fairchild Semiconductor Appoints Dr. Mark Thompson President and CEOApril 7, 2005...Fiarchild Semiconductor of South Portland, Maine appointed Dr. Mark Thompson as president and CEO taking over the spot held by founding president and CEO Kirk Pond. Dr. Thompson will also become part of the board of directors. Mr. Pond will remain chairman of the board. Dr. Thompson, who currently serves as president of its Manufacturing and Technology group will succeed him as president and CEO beginning May 4. Most recently, Thompson served as president and CEO of Big Bear Networks, a designer and manufacturer of integrated, opto-electronic interface solutions for next generation networks. Thompson continues to serve on the Board of Directors of Big Bear Networks. Thompson who holds a PhD from the University of North Carolina and a bachelors degree from the State University of New York, previously served as vice president and general manager of Tyco Electronics Power Components Division. Prior to its acquisition by Tyco, he served as vice president of Raychem Corporation's OEM Group.
"I'm pleased the Board is moving forward with the final stage of our existing succession plan by appointing Mark Thompson to lead the company into its next phase of growth," said Pond. "Not only has Mark demonstrated extraordinary leadership and business skills since he joined Fairchild last fall, but throughout his years in the industry he has developed a unique set of skills and experience that will enable him to map out and drive the next evolution of Fairchild.” He added, “Mark is the right person to now accelerate the company's next evolution, focusing on developing higher margin, more complex products to increase growth and deliver superior financial performance.” Mr. Pond led the team responsible for completing the industry's first management-led leveraged buyout when Fairchild emerged from National Semiconductor in 1997. Mr. Pond said, "I'm proud of the accomplishments of Fairchild's employees since we established the company. We've grown from approximately $600 million in sales to $1.6 billion in revenues last year, with 73% of those revenues generated by our targeted power market.”
“I am honored to have been chosen to be his successor," said Dr. Thompson. "We will build on a company that is well positioned in terms of process technology, account position, employee talent and financial health by accelerating our move to higher value, more integrated IC solutions." Agilent Launches Testing and Measurement Certification in ChinaApril 6, 2005...Agilent Technologies of launched their test and measurement certification program in Beijing, China. The program to cultivate local talent will become an important part of Agilent Technologies University, which offers learning oriented programs to improve standards among the testing and measurement (T&M) professionals. After completing the training and passing the thorough examination, program participants are awarded associate, expert, or master proficiency levels of certification. The certification covers testing for: wireless communication; radio frequency and microwave; optical and photonics; general electronics and digital; network equipment; and test automation.
Pat Byrne, president of Agilent's Electronic Products and Solutions Group (EPSG) stated, "The launch of Agilent Certification is a commitment to the goal of Agilent University: to improve the overall standard of T&M professionals." According to the company, Agilent hopes their T&M Certification will be an industry-recognized accreditation for highly qualified T&M professionals. Hai Su, president of EPSG in Asia said, “It provides individuals with career advancement, increased credibility, validation of knowledge and skills and, in particular, a competitive advantage.”
Microsemi Aims for Higher Profit Margins With Plant Consolidations
CompoundSemi News StaffApril 5, 2005...Microsemi hopes to reach 70-80% utilization of its manufacturing facilities by the end of FY 2006. To reach this goal and lower operating expenses, Microsemi began a three phase system of consolidation and cost reduction. Microsemi of Irvine, California USA, is entering into phase III of its consolidation program which includes closing its Ennis, Ireland manufacturing facility and consolidating the manufacturing operations of its Broomfield, Colorado high reliability products plant into other Microsemi plants. Among a range of other products, Microsemi corporation produces photodetectors, power amplifiers, and PHEMT and MESFET switches based on compound semi technology. The company reportedly completed phase I and phase II of its Factory Utilization Enhancement Program that included closure and consolidation of eight plants, and the reduction of employee headcount from 2,600 to 1,389.
According to the company, the Colorado manufacturing facility represent 12% of the companies annual revenues, and the Ennis, Ireland facility represents 5%. While costs for the completion of phase III are expected to run $9 to $12 million, the annual savings resulting from phase III are expected to be from $6 to $10 million. Each of the two closed facilities will be sold at the conclusion of phase III. Phase I and II involved the closure and consolidation of eight manufacturing facilities including facilities in Santa Anna, California; West Palm Beach, Florida; Bombay, India; Hong Kong; Mongomeryville Pennsylvania; Carlsbad, California; Melrose and Watertown, Massachusetts. Jim Peterson, Microsemi’s president and CEO said, “All of these decisions were based on improving the utilization of our assets to strengthen microsemi's competitive posture in the markets we serve and to gain increased operating profits." II-VI Partners With SemiSouth and MSU for SiC Development and Production Ramp-up
CompoundSemi News StaffApril 5, 2005...II-VI is partnering with SemiSouth Laboratories, Inc. and Mississippi State University to establish a Silicon Carbide (SiC) semiconductor substrate manufacturing facility in Starkville, Mississippi. SemiSouth Laboratories is a privately held company formed in 2000 to commercialize silicon carbide electronic materials and device technologies developed at MSU. This collaboration is part of an ongoing effort to ramp up SiC production as part of a 3-year Air Force Research Laboratory (AFRL) $6 million contract.
II-VI of Saxonburg, Pennsylvania USA, on February 23 was awarded $6 million by U.S. AFRL to scale up its production of SiC using its crystal growth technology to produce 100mm substrates. The 3-year contract was awarded through the Missile Defense Agency (MDA), and the Office of Naval Research (ONR) (through Penn State ARL, Electro-Optics Center). SemiSouth and II-VI have reportedly received a combined total of more than $10 million in federal funding since 2000 for technology development, process improvement, and process ramp-up, particularly in Defense Department-related projects.
"This partnership benefits Mississippi by moving university-based research into the private sector," MSU President Charles Lee said. "It will help significantly expand an existing high-tech industry, boost the capabilities of both companies and create the potential for additional industry spin-offs and jobs." The II-VI’s New Jersey development efforts combined with the manufacturing and development efforts of MSU and SemiSouth will help the companies develop next-generation industrial and defense applications, company leaders said. Our news features are reported
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