1) In seeking to improve its margins and diversify its product line, the
company began to spend heavily on developing new product lines, including
sub-systems, which are "smart modules" for controlling electric motors,
lighting ballasts, and automotive electronics. These sub-systems made up
10% of revenues in June, 13% in December, and should grow to 20% by June
2001. They also carry gross margins 10-percentage points greater than
discretes.
2) The company is also shipping new circuits it calls "power ICs," which
integrate power MOSFET and control functions on a single chip. Sales of
these products, which also carry higher gross margins, were up 16%
sequentially.
3) Finally, some of the company's strongest MOSFET shipments are coming
from the portable cell phone and data processing markets. These use a
high-priced "trench" FET, which is commonly employed in low-power
applications.
Structural changes also paying dividends.
In additon, the company made structural changes that are making a
difference internally now that the market has picked up. For one, it
reduced its cost structure by about $100 million in the past two years by
reducing materials costs, improving yields and shrinks, and by moving
more of its backend capacity to Mexico. Finally, the company has begun to
outsource 10% of its revenues, moving to 30% over the next couple of
years.
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