Tuttle goes for broad appeal: Interview with Tyson Tuttle, ceo, Silicon Labs

Silicon Labs has changed its focus since it sprang to life in 1996. Having built two sizeable revenue streams from modems and cellular products, it has redirected its focus on its core mixed signal competency in order to target broad based markets. A turning point came in 2007, when its cellular group was sold to NXP – a time when competing companies, like Qualcomm, had an R&D spend ten times that of Silicon Labs, according to Tyson Tuttle, the company's ceo. "We sold the cellular group for $300million and reinvested that money into the company, but it was a painful thing," Tuttle recalled. "It was about a third of our revenue and a third of our employee base. Now, we are at record revenue levels, but it is broad based, rather than cellular. I think it is a higher quality way to grow: the margins are higher, the differentiation we can achieve is greater." This broad based business – which includes microcontrollers, wireless and timing products – accounts for about half of current revenues. A further third is through broadcast – the company has a tuner chip in about 40% of all flat panel tvs and a range of am/fm radio chips. The remaining slice is at either end of a phone line – a legacy modem business, as well as chips for VoIP. Tuttle describes computers as the first 100m unit market and handsets as the first 1billion unit market – both markets from which Silicon Labs has largely exited. However, he believes the company's future lies with the 'Internet of Things' – and that it will probably be the first 10bn unit market. "In each of those transitions, the chips have become more mixed signal intensive. As you move more into the Internet of Things and you have a more diverse range of applications, it's not just for one single thing, it's for hundreds of things and I think it plays into the hands of a mixed signal company like Silicon Labs. I think that is the right direction, where we can become the leading supplier, where we can afford to make the investments and where we have the enabling technology to do the integration." The strategy removes the risks associated with putting all your eggs (and chips) in one basket. Tuttle continued: "It's no longer whether you 'win' Samsung or you don't. Now, it's how many of the 200 thermostats are you going to be in, how many smoke detectors and window sensors? In the microcontroller area, there are around 150,000 possible customers. A company like TI might serve 60,000 or 70,000 of them; we are probably serving 10,000 to 15,000. So the market opportunities are there; you just need to work out what parts of the market you want to play in. "We are saying wireless, low power, embedded processing, mixed signal intensive, small form factor; those sorts of things. But they are multibillion dollar markets and we can take share from the incumbents." Part of the journey towards this broad based model has been accelerated by the acquisitions of Ember, the Zigbee specialist, and low power 32bit mcu company Energy Micro. "It was about the teams," explained Tuttle. "Ember had the leading software team for Zigbee. It had been there from the beginning and its tool suite and stack were world class. We felt like bringing that team into our platform. With Energy Micro, we now have a leading low power mcu platform. If we had done this internally, it would have taken a long time to get to where we are now – and time to market is everything. I think we are looking at an inflection point in many of these applications and if you wait three years, the train will have left the station." The two acquisitions were strategic, rather than opportunistic – neither was up for sale – and the necessary gaps in the portfolio have now been filled. Tuttle said: "I think we have all the pieces needed for the Internet of Things. Everyone keeps looking to Wi-Fi and our strategy right now is to partner with the leading Wi-Fi suppliers for those systems that require that functionality, allowing us to focus more on low power, low data rate applications. The growth in the low power standards – ZigBee in particular – is going to be pretty dramatic and will be a good opportunity for us. And with the addition of MEMS technology on the timing side, we have a tremendous opportunity. If you look at where we are positioned right now, both in the complexion of our business and our broad based focus, and where we are in terms of the technologies required to address our target markets, it's just about execution at this point." In terms of the latest technology coming out of the company, Tuttle is 'very much excited' about the low power wireless mcu area, as well as the company's CMEMS technology. This involves building the MEMS directly on top of a cmos wafer to create timing devices that replace quartz oscillators. It is this proprietary technique that will produce timing devices that are smaller, more accurate and lower cost, and which allow greater levels of integration according to Tuttle. Where is it all going? Can Silicon Labs build on its current $600m revenues? "We have the chance to take our place alongside the preeminent broad based semiconductor companies," Tuttle concluded. "But we can come in and dominate some of these large markets. If we execute on our plans, our vision and our development projects, I see nothing getting in our way to get to $1bn and then $2bn worth of revenue." Tyson Tuttle Tyson Tuttle joined Silicon Labs in 1997 and helped design the company's first product, a silicon data access arrangement that subsequently achieved market share leadership in pc modems and allowed the company to go public in 2000. Tuttle led the marketing effort behind the company's first rf transceiver products for mobile handsets. He also spearheaded the development and market penetration strategy of the company's radio and tv tuner ics. Tuttle led the broadcast product lines until 2010, when the R&D team was consolidated under his leadership as chief technology officer. He then took over as chief operating officer in 2011 and was responsible for managing all of the company's business units and R&D. He became ceo in 2012.