Making of an audio chip firm in the PC boom era

Eric Cheng: Determination, passion, endeavor and perseverance are keys to success.

Eric Cheng, co-founder and president of C-Media Electronics Inc., is an electronic engineering graduate of the China Institute of Technology. His company, which specializes in the development of audio chips, is a venture between him and some of his university colleagues.

"My career path is quite simple. I joined IC Plus Corp. at the age of 22 and five years later, I left the company and started my own business with some colleagues," Cheng said. Since co-founders of C-Media came from the same college, "We are the only 'college-based' IC design house in Taiwan," he said jokingly.

Cheng attributes his skills and experiences to IC Plus. "Even though I do not have a post-graduate degree, being young and aggressive, I was promoted as project manager shortly after joining the company. At that time, IC Plus was successful in developing monochrome display cards for Eten Chinese System," he said.

Growing with the company

After some years of working at IC Plus, Cheng left the company to establish C-Media in 1991. With only a small capital of $188,000, it grew to $5.8 million after 12 years. At present, C-Media has 80 employees.

The company is aimed at selling multimedia products. "At the beginning, it was difficult. We always worried about our next business and did not know how the company would survive," he said. Fortunately, the situation changed in 1993 when C-Media took a project to develop an 8bit two-channel audio chip for a large firm. During the time of Windows 3.1, the requirement for sound was not that high and 8bit technology was simple. So C-Media was able to complete its first audio chip, which staged the roadmap for its progress in the audio-chip market.

"Sometimes, I think that we were just lucky since we entered the market when it was just emerging. We were able to grasp all the opportunities. In the premature market, on the other hand, not only is the technology requirement low in quality, but the pace for new product demand is also slow. Luckily, we were able to foster our capabilities and develop new products at the same time," Cheng said. Since 1993, C-Media kept its pace on launching one chip per year to gradually nab an ample amount of share in the audio market.

Another important milestone of C-Media is the government-supported technology project, which aimed to adapt 3D sound technology from a British company named Sensaura. According to Cheng, they went to Britain for technical training on DSPs and sound theories and ended up acquiring the source code of Sensaura's 3D sound software. "That leapfrogged our technology to a higher level," Cheng said.

C-Media's revenue reached $4.6 million in 1996; in 1998, the revenue rapidly jumped to $15 million; and in 2000, it further reached $28 million.

The cooperation with Elite Computer on the ISA 3D audio chips in 1997 also contributed to the rapid growth of C-Media. But like any business, it is not always a bed of roses. Cheng faced an unexpected obstacle in 1998. At that time, Intel launched the AC97 specification to integrate soft modem and audio chip. Since this new specification would help motherboard makers largely reduce their costs, C-Media, which only offered audio products, found itself in a tight situation.

Facing the prevailing problem of AC97's strength, Cheng thought of a countermeasure. He built a partnership with PCTel, the major software modem maker at that time, and together they developed a four-channel audio chip integrating 56Kbps-software modem interface and a fiber-optic interface. That came out successful. Hence, the company turned its defeat into victory, further reinforcing C-Media's position in the market.

"There will always be difficulties to overcome in each stage. From exploring the market and cultivating technologies to sustain the growth of the company, we have a lot of pressures to cope up with," he said.

Three years ago, when Cheng decided to make C-Media a public-listed company, another tough situation arose. "Elite Computer has always been our major customer. But if we decide to go public, we have to broaden our customer base so that the capital market would accept us," he said. During that period, Cheng tried his best to build relationships with other major motherboard makers like Asus and Micro Star. "How to win new customers and retain existing customers without damaging our profits was almost a mission impossible for me," he commented.

C-Media completed the IPO on over-the-counter market as emerging stocks last year. But the challenges will never end and Cheng is aware and keen in monitoring them. He is now mulling over on how to establish a management system that is most suitable for the company in its transition into a mid-scale organization.

With the company's broadened customer base and improved operational performance, it learned to adapt with the rapid changes of the industry. During C-Media's 10th year anniversary, the company won an award for industrial technology advancement from the Ministry of Economic Affairs. For Cheng and his partners, this was a momentous recognition.

Sound effect

Talking about the current industrial atmosphere, he pointed out frankly, "The fierce competition has made the audio chip market nothing but a price-cut battlefield. In addition, the system makers usually don't pay any special attention to highlight or even educate customers on how to utilize the sound effects that are built in the motherboard." Facing this situation, Cheng is thinking new strategies to differentiate products from competitors and increase revenue.

"To bring the sound effect out of the motherboard is our basic theme," he said. Currently, C-Media has completed the development of USB interface audio chip. It can be used on speakers, not only to playback the sound in digital way, but also to eliminate the need of a power line. In addition, C-Media also completed the software implementation of real-time Dolby Digital 5.1 encoder for PCs to target the emerging home-theater market. This technology will help PC users obtain high-quality Dolby Digital audio from the S/PDIF output, and reduce the number of wires connected between PC and a hi-fi audio system.

"We will also provide software services this year for those who adopt other vendors' audio chips but would like to have C-Media's sound performance - on a case-to-case basis. To sum up, we consider ourselves a complete sound solution provider to satisfy customers' need," he added.

Talking about technology, Cheng showed his passion for work from his earnest expression. He claimed that he plays the role as the "big" product manager in the company, planning the strategies and positioning of their products. But according to his staff, he is not only a top manager but also a "super-salesman" of the company. "He has a bagful of innovative ideas and endless energy. It seems that he never gets tired," one of his staff said.

"I'd like to inspire my employees to have a positive attitude and willingness to accept challenges. If an engineer is not 100 percent interested in the field that he engages in, it is impossible to create new ideas and transform the technology into commercialized products," he emphasized.

Now at his late thirties and working for more than 17 years, Cheng pointed out many important elements to success: determination, passion, endeavor and perseverance. And for those who also want to start their own businesses, he said, "Do not look down on yourself. Everyone has an opportunity to succeed."

- Karen Kou

Electronic Engineering Times - Asia