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10/6/12

Maxim: Growth in a Shrinking Market

It’s gratifying to see a chip company growing in a depressed market, and a recent conversation with Maxim Integrated was a breath of fresh air.
The company’s analog IC revenues grew 21% over the past 15 quarters while the market as a whole declined by 3%. Analog chip sales of other firms like Linear Technology, Texas Instruments, and Analog Devices are in line with the depressed state of today’s semiconductor market. Maxim’s analog IC market share has more than doubled from 4.1% to 9.0% over the last decade.
Why is this?
Maxim produces highly-integrated power controller chips some of which are widely used in cell phones. The mobile devices market is enjoying strong growth – some say mobile market revenues will grow at a 12% average annual rate over the next five years. With the right product a supplier can harness that market growth to increase revenues. That’s what Maxim has done with high-integration (i.e. high-ticket) analog chips.
The company’s high-integration products account for approximately 40% of revenues, up from 34% a year ago, and 21% four years ago. One Maxim power control chip sells very well into Samsung’s Galaxy line of smartphones.
Maxim is also using this approach in other markets including smart meters, femtocells, automotive electronics, communications, medical electronics, and industrial control.
The result is shown in this post’s chart (which can be expanded by clicking on it) which compares Maxim’s quarterly revenue growth (top line) against the quarterly growth of its five leading competitors.
Maxim has organized itself to align with end markets rather than with internal competencies. Analog chip companies do best if they develop very tight relationships with their customers’ design engineering departments and Maxim’s organization is an extreme example of how that can be done. The result has been the development of products that fit very precisely within their customers’ needs, resulting in strong sales and growth.
Maxim tells us that it plans to continue along this path and to grow the company based on well-defined highly-integrated analog products.
source: forbes.com

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