We grew 24% year-on-year in Analog last fiscal

The company registered a dip in revenues in the last two
quarters. Was the US housing market downturn responsible for this?

Microchip has a significant design activity in the housing market with
customers who build appliances, security systems, garage door openers, smoke and
carbon monoxide detectors, sprinkler systems, irrigation equipment in the home
among other things. These are related to new home construction. There is also a
replacement market where you purchase a new equipment when your existing
appliances go bad. A fairly large portion of the market is driven by new home
construction. New home construction in the US peaked by about two million units
a year. That figure in the last year dwindled to less than one million a year.
As a result, the consumption of products in that market is down drastically. We
were able to deal with it because we are also in the consumer, automotive,
communication and office automation markets.

What kind of services are rendered at Microchips India design
center?

The Bangalore center is doing a significant number of Silicon designs which
would go to the US, where they would be used in manufacturing at one of our fabs.
The products designed here are not for the Indian market but for the global
market. They have done a lot of designs for the PIC 18, PIC 24 and PIC 33
architectures. We have an application design center in India where engineers do
reference designs and product verification support for specific customer
markets. They also work on development tools that our customers can use. We also
have a call center here.

How is the company doing in the analog microcontroller space?

We have done well in analog over the years. We grew 24% year-on-year in
Analog last fiscal. This year it has been flat because of the housing market. It
is a good competitive market and there are many good analog companies. It has
not been an easy entry into analog and has taken us many years to establish
ourselves in analog.

What major trends are shaping the microcontroller market?

In terms of performance, it is moving from 8-bit to 16-bit to 32-bit
microcontrollers. Then there is growth along the functionality line. For
example, Microchip has a line of 16-bit microcontrollers that we call digital
signal controllers, which has the DSP functionality combined with the
microcontroller in the same chip. It allows the customer to execute digital
signal processing (DSP) functions, speech libraries, and echo cancellation.

Priya Padmanabhan

maildqindia@cybermedia.co.in