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Is Freescale going after the analog plum?

Posted: 19 Feb 2008 ?? ?Print Version ?Bookmark and Share

Keywords:analog market? Rich Beyer? digital IC?

Who could make a big play in analog?

Try Freescale Semiconductor Inc. That appears to be evident, especially when the troubled chipmaker last week named Rich Beyer as its new chairman and CEO, effective March. Beyer comes to Freescale from analog chipmaker Intersil Corp., where he was CEO and a member of its board of directors.

Freescale sells a smattering of analog parts. But at present, Freescale is a relatively small player in the overall analog business, but that's the problem. Loss-ridden Freescale needs to find new markets!and fast. And unlike digital, analog is growing at a decent pace.

"The eventual possibility of a large analog competitor may occur with Freescale under Rich Beyer," said analyst Doug Freedman of American Technology Research Inc., in a report. "Rich Beyer's successful analog track record is attractive to Freescale, as private equity investors are eager to return the company to profitability."

Learning from TI
Freescale may want to take a page from one of its rivals, possibly Texas Instruments Inc. Over time, TI has transformed itself from being a digitally-oriented "DSP company" to an "analog company." In fact, TI is the world's largest analog vendor.

Under Beyer, Freescale could go in several directions. "Freescale is currently a minor player in areas Intersil competes in, but could grow an analog business in several possible ways: One, is hrough acquisitions, developing high-performance analog products to drive revenue growth and earnings and also offset lower margin business (i.e. the TI playbook); And another is to integrate analog functions and other logic around its embedded MCU family to create flexible SoCs used in industrial and automotive applications (i.e. the Cypress playbook)," Freedman said.

Some wonder if Freescale could one day acquire Intersil, which is a mid-sized analog play. It's unlikely that Freescale would acquire the other big analog houses, such as ADI, Maxim and Linear Technology.

Databeans Inc. believes the analog sector had a flat 2007, but the firm expects 12 percent analog growth this year.

"I don't agree with Databeans that we'll see an uptick in 2008," said Steve Ohr, an analyst with Gartner Inc. "At best, 2008 will mirror 2007, which was only a 4-percent year for analog; at worst, recession will happen and revenue growth will fall off in the later half of this year."

Getting talents onboard
Ohr also has another viewpoint about Freescale. "I personally don't see any more acquisitions for Freescale," Ohr said. "I think they spent a lot of available money with the acquisition of SigmaTel, but, off course, further acquisitions are not out of the question. More likely, they may be raiding competitors for management talent."

Freescale recently said it has agreed to purchase SigmaTel Inc. for about $110 million to secure complementary analog ICs as it diversifies sales into the digital and consumer electronics markets.

Stiil, Freescale has a long ways to go in analog. "They've already hired an analog guy!Arman Nacovi, out of Intersil, in fact, over a year ago!to help formulate an analog product strategy. Nacovi sees power management as a hot button," Ohr said. "As an aside, I'd be curious if he gets along with Rich Beyer."

Also on the product front, "there are an awful lot of analog parts![such as] voltage regulators, for example!that are reported as 'application-specific standard products' that could easily be converted to catalog items," he said. "They make, for example, a high-current DC/DC converter that pairs with some of their Power PC processors."

But overall, he added, "Freescale really does have a lot of analog talent in-house."

- Mark LaPedus
EE Times

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