Finding Opportunity in Tough Economic Times

Dec. 1, 2008
This year's CEO Roundtable provides insight into what it is like for CEOs successfully steering their ships through the rough seas of turbulent economic times

These are challenging times for business leaders. This year's CEO Roundtable provides insight into what it is like for CEOs successfully steering their ships through the rough seas of turbulent economic times, while keeping their sights on long-term growth and ongoing challenges such as quality control and environmental responsibility. Participating in this year's roundtable are Greg Acopian, Acopian Power Supplies; Jack Radgowski, Central Semiconductor; Michael Hsing, Monolithic Power Systems; and Oleg Khaykin, International Rectifier.

Power Electronics Technology: Given the current state of the economy, what do you identify as the growth opportunities for the power industry in the coming year and for the long term?

Greg Acopian:

After the current economic crisis has been resolved, the total demand for electronic equipment will continue to grow, and almost every piece of it will require some kind of power supply. Some will be integrated into the equipment design, and some requirements will be satisfied with low-cost commodity “bricks” coming from offshore. A fast-growing part of the market requires power supplies either customized for the application and/or with interactive capability, ranging from simple things such as remote inhibiting and manual controls right on up to complex digital systems. And that's where some good opportunities are, because customized solutions can't be readily done offshore.

Jack Radgowski:

Out of necessity, growth opportunities in the present economic situation are coming about by reason of and by virtue of the fact that the necessity begets efficiency in all we must do in order to pull ourselves out of the economic calamity we are immersed in. Efficient use of power electronics must take a leading role in the emergence out of the abyss.

Michael Hsing:

We continue to execute on our plan to further penetrate into the flat-panel TV and LCD monitor market with higher efficiency and reduced system BOM cost solutions. In addition, we see new growth opportunities in Blu-ray disc players. For the long term, we are focused on applications that continue to require new levels of efficiency. This includes portable power applications in netbooks and notebook PCs, as well as industrial and telecom enterprise applications. The common thread is that they all require high current, small size and >90% high-efficiency, while operating directly from a battery voltage or power-supply rail between 12 V and 24 V.

Oleg Khaykin:

With global energy consumption expected to double between 2005 and 2030, new legislation and regulations, and growing consumer demand and awareness are driving growth in energy-efficient end products, particularly in the appliances, lighting, home entertainment systems, computing and communications, and automotive markets. Demand for hybrid and electric vehicles, for example, is increasing as a result of the pressure to cut carbon emissions and concerns regarding the stability of supply and the cost of oil. These same concerns are also fuelling demands to make conventional petrol- and diesel-powered automobiles more efficient. As we move forward, semiconductors will play a key role in the development of ever-more efficient vehicles — and the other end products that we depend on in our daily lives. It is for this reason that IR is developing new technologies and products that will meet the rapidly evolving needs of the designers of energy-efficient applications.

PET: What impact do you think the Obama presidency will have on the power industry?


I believe the Obama presidency can bring about new tax incentives and “green initiatives” for power conservation in all kinds of offline products, from consumer goods such as TVs and white goods to enterprise-storage equipment. This fits perfectly with MPS' long-term strategy.


The Obama presidency will need to make and show an economic change quite expeditiously in order for him to make good on campaign promises. The president-elect will need to rely on all factors that can help him achieve his goals. He has expressed strong support of green and clean technologies, and utilizing power electronics effectively will help achieve those goals.


An increased emphasis on scientific development, renewable energy, high-tech and infrastructure renewal — Internet II, for example — should accelerate market growth. Just how much, we will have to wait and see. Everyone is hoping President-elect Obama will make wise decisions that will have both long- and short-term benefits for the economy. Also, I think he has the ability to inspire the country. The power industry needs what all industries need — a healthy economy that produces a need for its products.

PET: How do you think the volatility in the financial markets will play out and how will it impact your business?


The world's economic balance will be affected in ways we can't clearly imagine or predict, so, along with every other business, we will be hoping for the best and preparing for the worst.


Being in business since founding our company nearly 35 years ago in 1974, we have been through many downturns in the economic cycle and, not only have we survived, but we have done so without ever having a single layoff. During each downturn, we have always focused on being super conservative in all that we do. And most of all, with the knowledge that the cycle always turns up, we focus on our being certain that we will be ready when business picks up. The financial market volatility and the associated tightness of lending indeed have an impact on debt-funded institutions and will cause an industry shakeout of weakly capitalized companies. Our company has been most fortunate in that we are not dependant on borrowing for our existence. We don't know what the future holds, but we feel well-positioned to face and overcome the challenges we may be faced with.

PET: Do you see environmental compliance issues as having a major impact on your business? If so, how are you addressing these issues?


Many of our customers have required us to certify our compliance with certain environmental requirements such as lead- and halogen-free statements.


At Acopian, we feel very strongly about protecting the environment. Sarkis Acopian, my father and the company's founder, never threw anything away that could be reused or recycled, and he taught everyone around him to do the same. I still remember the totally non-commercial National Geographic article reprint entitled “What On Earth Are We Doing?” that he sent out back in 1990 instead of a product bulletin that would have increased our sales. Not all of our customers appreciated that bulletin back then, but the environment is that important.

PET: In the face of downward price pressure, how are you currently addressing quality-control issues?


There are different ways to look at quality. Acopian's engineering department uses components very conservatively to assure that our products will have what we call design quality. Other companies may have power supplies priced lower than ours, but no one beats our reliability. Our customers often tell us about units that have been in continuous service for 30 years or more without a problem.


Our members are indoctrinated from the first day that quality of product and quality in all that we do is essential for the continued success of our company and for the job security of all on the Central team.

PET: How do you see volatile energy prices having an effect on your business?


Rising energy costs have had a definite impact on our bottom line, especially since the increased costs are difficult to pass on to customers in our industry.


Energy is not a large portion of our manufacturing cost, so increased energy pricing is not a major factor for us directly. However, as energy costs rise in coming years, efficiency may become as important a specification of our products as performance. Where our Pennsylvania facility is located, electric power deregulation in 2010 is expected to abruptly increase the cost per kilowatt hour by about 35%. So just as with consumer appliances, potential customers will be willing to pay more for more efficient products with short-term payback of their cost premium and everyone wins.


Electric motors present a major opportunity for significant energy savings. Consuming over 50% of the world's electricity, more than 80% of electric motors are wastefully controlled electromechanically. Designs are moving toward variable-speed permanent magnet motors that are smaller, lighter and lower cost. And as long as you have a good control technique, permanent magnet inverterized motor control can achieve 95% efficiency by co-designing the power train and the driver, and an algorithm to control them. IR's design platform for variable-speed motors brings digital, analog and power silicon together with algorithms, packaging, development software and design tools to deliver a complete solution.

The data-center marketplace is another area that demonstrates how we can save energy and increase performance. Through close ties with our customers, we have developed products that can deliver the highest efficiencies in power management for this key sector.

IR's GaN-based power device technology platform will provide improvements in key application-specific factors of merit of up to a factor of 10, compared to state-of-the-art silicon-based technology platforms. GaN-based power devices will eventually be used in most of the same applications as current silicon-based power devices, as well as potentially new applications, currently not possible with silicon devices. These applications will evolve in accordance with well known market development behaviors over the coming decades, as GaN-based power devices replace silicon-based power devices as the technology platform of choice. Power-conversion applications currently targeted for GaN-based power devices include ac-dc converters, dc-dc converters, motor drives, class D audio and lighting systems.

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