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Industry slowdown is short term, says National's Halla

Posted: 11 Oct 2004 ?? ?Print Version ?Bookmark and Share

Keywords:national semiconductor? analog? electronics? lcd tv?

Refraining from making any predictions, National Semiconductor Corp. President and Chief Executive Brian Halla said in an analyst's meeting Tuesday (Oct. 5) that the current slowdown in the electronics industry represents mostly a short-term inventory correction by customers.

Though acknowledging the current tailspin has affected National's short-term outlook, Halla and other company executives expressed confidence the situation was temporary, and spent much of the two-hour meeting discussing the company's strategy to further improve gross margins and market share by increasing development of analog products.

"After we get past the inventory correction, we don't see anything that represents a major slowdown," Halla said.

Lewis Chew, National's chief financial officer, added that unlike the downturn following the industry boom in 2000, there is no overhang from the communications infrastructure sector. "We don't believe this cycle will be as bad as the last cycle," he said.

Company executives were quick to point out that National has over the past year outperformed the industry in key product areas.

Donald MacLeod, National's chief operating officer, said the sales of linear products grew 44 percent over the past year, compared to 17 percent for the rest of the market, while power product sales grew 57 percent, compared to an industry average of 36 percent.

National executives reiterated the company's strategy of continuing to develop more analog products based on proprietary process technologies, particularly in high-growth, high technology areas such as high-speed op-amps, data converters, and interface products. This would help National attain its goal of raising gross margin, currently at 55 percent, to 60 percent next year, according to Halla.

Unlike past growth cycles driven by a single application such as PCs or network infrastructure, Halla said there was no "killer" application to drive growth this time.

"It's not going to happen. The next cycle will be driven by personal technology, not information technology," he said. "DVDs, PDAs, full handsets, LCD TVs are driving growth, the problem is you can't pin it down to just one technology or application."

Earlier this year, Halla hesitated to forecast the industry downturn in an industry conference. Though mostly low-key at the meeting, Halla retains a sense of humor. He jokingly told an analyst, "National is having a fire sale in its stock," referring to the company recently granting dividends to shareholders.

- Spencer Chin

EE Times

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