It's time for design activities

BY GREGORY L. WILLIAMS
President and Chief Executive Officer,
Intersil Corp.,
Irvine, Calif.

The semiconductor industry has always been marked by periods of growth and recession, but the overall growth rate-17 percent per year over the past 20 years-still makes it one of the most challenging and exciting on the entire planet. It's imperative that semiconductor companies ramp up design activities during down market cycles to grow with their customers when the inevitable upturns come. Design-ins-particularly of high-value, proprietary products-help provide a barrier to entry by competitors when industry conditions improve.

At Intersil, we've accelerated design activities-particularly in the residential gateway market-as we gain a foothold with wireless LAN chip sets, voice-over-Internet Protocol chips and power-management products. When the global markets recover, our orders and revenue will ramp from the designs we win today with the industry's leading companies.

It is important to stay engaged and continue to support customer design activities despite a tough market today. Self-assessment is also crucial during a down cycle, so that resources are properly allocated to "ride out the storm" and prepare the company for the next wave of growth. And as veterans of this industry know, the next growth wave will come.

Companies that are strapped with debt or with only a small cash reserve will have to make more difficult decisions as 2001 unfolds. We're fortunate at Intersil to be in the best position in our history to ride out a down cycle in the market. We've transitioned-in less than two years-from a commodity-based company with more than $500 million in debt and little cash to a focused analog and wireless company with no debt and more than $600 million in cash.

We think that industry conditions will remain difficult for the remainder of 2001. 2002 will certainly not offer the tremendous growth that the semiconductor industry enjoyed in 2000, but we believe it will be our first return to historical average growth.

We look forward to the challenges ahead, as wireless connectivity plays a bigger role in people's lives. If the 1990s was the decade of faster and faster microprocessors, this decade will be driven by the demand for mobile access. People are going to demand mobile access to high-speed data, voice and video at work, at home and in public places-making historically unproductive space productive.

And companies that help enable mobile access-whether through wireless networking, broadband infrastructure or battery power management for portable products-will reap the rewards.

Return to 2001 Midyear Forecast