Market Insights

VIP Interview with Steve Sanghi CEO Microchip

September 04, 2016 by Henning Wriedt

Henning Wriedt: Mr. Sanghi, you are the CEO of Microchip Technology for 25 years - Congratulations! In a nutshell, what happened in the MCU market since

Henning Wriedt: Mr. Sanghi, you are the CEO of Microchip Technology for 25 years - Congratulations! In a nutshell, what happened in the MCU market since 1991 regarding specifications and market developments?

 

Steve Sanghi: Microchip was founded in April 1989 as a spin-off of General Instruments’ semiconductor division. Annual revenue in 1989 was ~$65M, and our annual revenue in our most recent fiscal year was ~$2.2 Billion.

A lot has happened in the MCU market since 1991. First, almost the entire market has converted to field programmable MCUs. In 1991, the majority of the market was based on ROM based MCUs that were programmed in the FAB using a mask. Microchip brought the first cost effective field programmability to the market in 1990 and today if you don’t have field programmability, you are not a player.

Beyond that, the MCU market has seen multi-dimensional progress in photolithography, compute performance, integration of analog, small package sizes, C+ programming language versus assembly language in 1991, integration of MCU with peripherals (like USB, Ethernet, display drivers, IR, Wireless protocols, power management etc) and multi-chip modules.

From a market standpoint, there has been a tremendous growth in the MCU market in automotive, industrial, PCs and tablets, mobile phones, communication, medical and consumer end markets.

With a predominant focus on the MCU market, but also including analog, Microchip has achieved 102 consecutive quarters of profitability, something that no other semiconductor company has been able to achieve. For long time, our vision has been that you can take any end product, and either it has a MCU or should have one to add connectivity, security or intelligence to the device.

 

Microchip Headquarter in Chandler, Arizona
Figure 1: Microchip Headquarter in Chandler, Arizona

 

Henning Wriedt: Microchip bought 12 companies during the last 14 years. Is this M&A strategy the best strategy to stay current with customers, technologies and markets?

 

Steve Sanghi: As the semiconductor industry consolidates, Microchip continues to execute a highly successful consolidation strategy with a string of acquisitions that have helped to double our revenue growth rate compared to our organic revenue growth rate over the last few years.

The Atmel acquisition is the latest chapter of our growth strategy and will add further operational and customer scale to Microchip. Both companies have a strong tradition of innovation, stretching across microcontroller, analog, touch, connectivity and memory solutions. Joining forces and combining our product portfolios will offer our customers a richer set of solution options to enable innovative and competitive products for the markets they serve.

Our corporate guiding values include “Customers are our focus,” and “Employees are our greatest strength.” Each time we complete an acquisition, it allows us to better serve our customer base with a more complete portfolio and we add tremendously talented employees and their innovations.

 

Henning Wriedt: What are your strategic plans regarding wireless technologies?

 

Steve Sanghi: Wireless-connectivity continues to proliferate, and our efforts here are focused on providing unique and complete solutions that provide true ease of use, as well as rapid implementation that covers all of the major standards.

Microchip has a broad portfolio of wireless solutions including Bluetooth and WiFi along with new standards such as LoRa. Microchip’s RN2483 LoRa module was the world’s first module to pass the LoRa Alliance’s LoRaWAN Certification Program. We were also the first to deliver LoRa evaluation kits with everything needed for a developer to create a LoRaWAN network right at their desk.

 

Henning Wriedt: How is the market acceptance of MPLAB Xpress, your cloud-based development platform?

 

Steve Sanghi: Today, all Microchip 8-, 16- and 32-bit PIC microcontrollers and dsPIC digital signal controllers are supported by a singular integrated development environment—the free MPLAB X IDE. MPLAB Xpress, the cloud-based development platform for 8-bit MCUs, brings the most popular features of MPLAB X IDE to Internetconnected PCs, laptops or tablets, has been extremely well received, especially by customers who are new to Microchip.

To date, MPLAB Xpress has been immensely successful, with over 17,000 unique users and 34,000 software projects begun since February 2016. In addition, we have seen strong demand for the IDE’s recently launched companion hardware, the MPLAB Xpress Evaluation Board. With plans to expand support for our 16-bit MCUs in July of this year, we expect continued success of our cloud-based development.

MPLAB Xpress is the easiest way to get started with PIC microcontrollers with zero downloads, sign-in or setup needed to start designing. It is free and users can access a library of Microchip-validated code examples and interface to MPLAB Code Configurator (MCC) for GUI-based MCU peripheral setup and automatic code generation. Additionally, the MPLAB Xpress Community enables developers to share their code, design ideas and knowledge.

 

Screenshot of MPLAB Xpress
Figure 2: Screenshot of MPLAB Xpress

 

Henning Wriedt: Is IoT still hype or real business for Microchip?

 

Steve Sanghi: It is definitely real business for Microchip and our customers are creating new and exciting products daily. However, Microchip customers have been making connected devices for years. Smart, connected devices are growing and it’s been given a clever name, IoT, but the activities have been going on for many years.

That said, we are not significantly dependent on any specific market, customer or application. Our existing customers are looking to enable IoT functionality in their products. The existing devices from Microchip, such as 8, 16 and 32-bit PIC microcontrollers, analog, mixedsignal, memory and embedded Wi-Fi and Bluetooth modules are already well situated to enable IoT functionality.

In addition, there are emerging products and applications that can take advantage of Microchip’s flexible development environment, broad connectivity solutions and product longevity. We are also engaged with IoT ecosystem partners such as cloud providers to help our customers get to market. One of the challenges I see around IoT is security and privacy.

This is also at the forefront of consumers’ minds. Companies creating products in the IoT market need to make certain that they can reassure their customers of data robustness, security and privacy, as well as the secure functionality of the device. We are creating and introducing products for this very purpose.

The recent acquisition of Atmel will continue to strengthen our portfolio by adding 32-bit microprocessors and additional security devices such as the ECC508A that integrates ECDH (Elliptic Curve Diffie–Hellman) security protocol—an ultra-secure method to provide key agreement for encryption/decryption, along with ECDSA (Elliptic Curve Digital Signature Algorithm) sign-verify authentication suitable for many applications outside IoT as well.

 

The MCP87000 family of highspeed MOSFETs maximizes the power conversion efficiency in switched mode power supplies
Figure 3: The MCP87000 family of highspeed MOSFETs maximizes the power conversion efficiency in switched mode power supplies.

 

Henning Wriedt: What is the status of your MOST technology?

 

Steve Sanghi: Microchip is dedicated to MOST networking, and the team working on this technology continues to drive it into the future with the added expertise that Microchip brings to the table. MOST continues to expand to all car sizes and manufacturers across the globe.

We recently announced MOST technology is now in the global compact car platform for GM that includes the Chevy Cruze, Chevy Volt, Opel Astra, Buick Excelle and Buick Verano.

MOST networking technology is in compact, mid-size, full-size, performance, cross-over and SUV, truck and luxury platforms and is the de-facto networking system standard for 30 global car maker brands and over 204 vehicle models. MOST-based vehicles are now being manufactured worldwide, including North America, Asia and Europe.

MOST has been built from the ground up, in cooperation with automakers and their premier suppliers, to address the special challenges that result from the more extreme environment and long lifecycles required of automobiles. Microchip is 100% committed to its future.

 

Henning Wriedt: How do you judge the importance of Wide Band Gap Power Semiconductors?

 

Steve Sanghi: Today, wide band gap semiconductors have very limited adoption outside of a few niche applications. That is the reality, due to the cost of the devices and the stage of technology development. They could grow. These technologies have great potential in high power applications with critical efficiency requirements, but at the same time they will never displace silicon for general use electronics.

When we design our control and drive solutions, we certainly think about the kinds of loads our customers will be using, and some of our customers do use wide band gap devices in their systems alongside Microchip products. However, the broader market really isn’t there yet.

 

Henning Wriedt: What role does power electronics play for renewable energy and electric cars?

 

Steve Sanghi: Electric cars and renewable energy are complex power electronics. The semiconductors don’t just play a role, they define the capabilities of the end product. The electric vehicle, or even hybrid electric vehicle, is more of an electronic system than a mechanical system.

Similarly, solar power (and other distributed renewable systems) requires networks of power conversion to intelligently squeeze out as much energy as possible. The leaders in these markets will be the companies with better electronics. At Microchip, we are actively helping our customers control and drive these applications. They are very exciting, dynamic markets.

 

Henning Wriedt: From the smartphone to the automated factory, power management is an ongoing challenge for the system designers. How does Microchip help?

 

Steve Sanghi: We help in many ways. Microchip has a very large power offering, everything from tiny boost converters for battery powered portable applications, to dsPIC DSC solutions for bus balancing in electric vehicles. We have reference designs, evaluation boards, application notes, and field experts in all areas of power electronics.

We even have code examples and code generation tools for digital power control with our PIC microcontrollers and dsPIC DSCs. Microchip makes some of the most innovative power management solutions available today.

 

The MIC33030 is a highefficiency, 8 MHz, 400 mA synchronous buck regulator with an internal inductor and HyperLight Load® mode.
Figure 4: The MIC33030 is a highefficiency, 8 MHz, 400 mA synchronous buck regulator with an internal inductor and HyperLight Load® mode.

 

Henning Wriedt: About half of your revenue flows through the distribution channel. Does that limit your marketing access to your customers and their feedback?

 

Steve Sanghi: Just the contrary. We work with them in partnership to meet customer needs and support and hear from channel partners regularly. Microchip is highly diversified, with more than 90,000 customers and countless applications—our top 10 customers make up less than 10% of our business, and no one customer is more than 3% of our business, so channel partners are important.

However, we also have unmatched internal support and a worldwide sales team to obtain feedback. In fact, we have the semiconductor industry’s only non-commission sales force, which is focused on meeting customers’ needs instead of territorial design wins. They are a critical source of information and feedback.

 

Henning Wriedt: From which sectors of the electronics market do you expect major growth?

 

Steve Sanghi: As I look forward, I see significant growth drivers coming from the following markets and applications: automotive (smarter, connected, self- driving and electric cars); energy efficient and connected appliances; medical instruments; and, for the risk of using buzzwords, Internet of Things (IoT). Over time, more and more things will keep getting connected and wireless connectivity with the MCU will be a necessary feature to play in the MCU game.

 

Henning Wriedt: What is your take on the so called ‘chip consolidation’ - or is this kind of phenomenon always around?

 

Steve Sanghi: I don’t know whether you mean “chip integration” or you mean the consolidation of the industry. So, let me address both.

The chip integration has been going for 35 years. Today a high end microcontroller has a CPU, memory, analog, power management, interface peripherals, I/O ports and all the firmware needed for control. It is in fact a computer on a chip. The amount of integration will continue to increase. Multi-chip modules will take this integration much farther as we are able to combine chips built of dissimilar technologies in a single module.

Regarding the consolidation of the industry, it is a by- product of slowing growth in a mature industry. In an industry of $350B a year, there seems to be no visible new killer market that will accelerate the growth of the market like PCs and mobile phones did in prior decades. Therefore, the industry is consolidating at a record pace. Microchip is in the middle of it and is continuously acquiring other semiconductor companies and doubling our growth rate.

 

Henning Wriedt: Thank you Mr. Sanghi for your time and the information for our readers.

 

About the Interviewee:

Steve Sanghi received his Bachelor of Science in Electronics and Communication Engineering degree at Punjab University, then Masters of Science in Electrical and Computer Engineering at the University of Massachussetts. He is the CEO of Microchip Technology of more than 30 years.