Santa Clara Siren Calls
by Paul McGoldrick
This could be a really special week for National Semiconductor, if I'm reading
the news from Santa Clara correctly. No, it's not that the company has decided
to have its two-year old headquarters building remodeled to look like something
a competent architect could have designed; it's that maybe it can survive
as an analog company!
At last Mr. Halla has woken up to the fact that while the Internet appliance markets might be something it can sound sexy to be playing in, they aren't going to make any money today or for the foreseeable future. The company is also giving up in the battle for sockets in the baseband cellular business and both sides of the company are up for sale. In company-speak, "These businesses have an excellent future. But at this point, to achieve that future requires more capital than we are prepared to invest."
"…we are prioritizing R&D spending on product areas that drive higher returns sooner." Hooray! Analog rules! But why the heck has it taken so long for management to wake up to a fact that has been obvious for generations of employees and observers of the company? National has had some of the worst management in semiconductor history allowing for the spawning of so many other companies in the analog space that it should be really unfunny. So many employees, thwarted by management's lack of imagination, have also gone to other opportunities almost making the company the entry-level training ground for the industry.
The admission that things haven't worked out well in the base station arena is also an admission that the products being offered simply haven't kept up with those from other vendors, in smarts, specifications and timeliness, and that the talent for the technologies involved from high-speed DACs and ADCs to PAs and LNAs have migrated elsewhere.
But focusing on analog is good, very good, and we hope that this sign of remission to an intelligent state will last the course of time. What might be unfortunate are some of the remarks made about the future of company-owned fabs. In a simultaneous announcement that National has entered into a long-term technology and manufacturing agreement with TSMC Mr. Halla said, "National will continue to be able to offer products at leading edge line geometries without having to commit the huge capital required for a 300 mm fab." In an interview with BusinessWeek, Mr. Halla also said that he didn't want to have to compete with TI and Intel in the baseband arena and that he didn't believe analog manufacturers would be able to keep up with the costs of new fabs.
That short-sighted logic is not the best sign for the future and makes companies like TI, Analog Devices, even Microchip, more in control of their destiny than a deal with TSMC will ever give National. National's pricing methods are the bane of the industry but long-term, losing control of production, will force their pricing up if they are going to report decent margins. Mr. Halla also announced immediate layoffs - sorry, reduced positions -of 5% of the company's workforce.
It's probably too late to get the likes of Mark Levi out of snowy Ottawa and back to California; and it's probably too late to get hundreds of other extremely bright and far-seeing employees back from other parts of the industry, a number of them occupying VP positions in rather nice ventures within a few miles of Kifer. I've even bumped into them as they come back to do business at the Credit Union - National is one of those companies that really does become an Alma Mater for a lot of people.
So, the hideous building stays and analog is recognized at long last;
but can we guess how many more generations of newly-graduated engineers
will hear the siren call from this part of the Lawrence Expressway?