We target to surpass the market growth rate

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Ganesh Moorthy, executive VP and CEO, Microchip Technology

Microchip Technology is a leading provider of microcontroller and analogue semiconductors, providing low-risk product development, cut in total system cost, and faster time to market for thousands of diverse customer applications worldwide. Ganesh Moorthy, now executive vice president and chief operating officer of Microchip Technology Incorporated, joined the company in 2001 as vice president of its advanced microcontroller and automotive division. he spoke to Jesus Milton Rousseau S of Electronics Bazaar on Microchip’s strategies, performance during recession and future growth plans for the Indian market.

EB: Where does Microchip stands in microcontroller market compared to its global and Indian competitors?

Microchip is one of the market leaders in 8-bit microcontrollers (MCUs). Our growth rate is 25 per cent more than our global competitors. In India, we have 14 per cent market share in 8-bit MCU market, which is our largest revenue generator.

EB: What is Microchip’s USP, and how is it different from its competitors?

Our USP is to provide a single platform solution that is compatible with 8, 16 and 32-bit MCUs. We also provide a single set of software and development tools. We promote our products as platforms that offer diverse choices to our customers. Besides, we offer the best technical support in the world. We help our customers to identify the problem and choose a solution accordingly. Microchip has been a very profitable company for investors and September 2009 was our 76th consecutive quarter of profit. We always believe in delivering value to our investors.

EB: Which verticals are being dominated by Microchip and what are the important verticals for the company in India?

Our products find common application in all sorts of electronic control applications, ranging from consumer electronics to industrial, to automotive, telecommunications and office automation, for example, PIC 16, PIC 18 and PIC 24 MCUs. Microchip is trying to build a broad base of capabilities in India. One-third of our business comes from consumer electronics vertical and the rest from automotive, industrial, office automation and telecom verticals.

EB: How are your non-microcontroller products performing compared to MCU products? Can you share with us their contribution in revenue generation?

Microchip makes 1 billion MCUs every year. It generates 81 per cent of the overall revenue of the company. The remaining 19 per cent business comes from analogue and memory products, each generating 9 to 10 per cent revenue. All our products work in conjunction and give complete solution to the customers.

EB: What are the target markets for Microchip in India?

In the automotive sector, we are targeting car security and dash board applications. In the industrial segment, we are focusing on UPS and inverters. Also, we are integrating microcontrollers with connectivity applications like energy meters. In the consumer STB market, our product is widely used in universal remote controls. In the personal computer market, we are targeting applications like fan cooling.

EB: Please elaborate on your marketing strategies in India.

Currently, Microchip is focusing on training customers. We have regional training centres at New Delhi, Pune and Bengaluru. In each facility, 10 to 12 engineers are trained every day. We also offer free training through our distributors and third party trainees. We have developed a delivery mechanism for 10,000 engineers. The company is presently focusing on various engineering products.

EB: What are the company’s growth targets for 2010 and beyond?

We target to surpass the market growth rate in the next few years. To achieve this, we will align our growth strategies with the changing market scenario.

EB: How Microchip managed to avoid worldwide layoffs during recession?

It’s not the products but the employees who make Microchip a successful company. Recession was the defining moment for many big companies. But we took a different path as our 5,000 employees are our greatest asset. When our revenue sunk, we cut down our discretionary expenses like travel allowance and opted for voluntary pay cut. Similarly, when the market will pick up we will share the rewards with all our employees. The morale of our employees was high throughout the recession, thus our productivity did not suffer.

EB: Can you share some details about Microchip’s R&D in India? How is it contributing to the company’s global business?

Microchip’s design centre in India caters to the needs worldwide. The physical part of IC design layout is done in India. Also, validating silicon and software development is done here. These are important part of solutions provided to customers. The Indian design centre is contributing to all phases of production except manufacturing.

EB: Can you share more details about your office development activities in India?

In the long-term, we want India operations to grow and be a better revenue generator. We will retain the present workforce and begin hiring in 2010.

EB: Can you share details on how you’re achieving low-risk product development, and faster time to market, lowering total system cost?

Customers know when they want to start their product development. So, when they decide to migrate from one MCU to another, 70 to 80 per cent of them face high-risk. They are not only forced to change the architecture but also rewrite the entire software. We lower the risk by offering products that help them change the platform easily. We offer development tools which are free and easy to use. Also, we offer free software which can be quickly evaluated. We also offer prototypes.

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