Focus I Linear Technology
Defence market starts to pay off
Being focused and a willingness to stay the course means that the military market is beginning to pay dividends for Linear Technology, as Neil Tyler finds out
A
ccording to earnings rankings from Bloomberg, you can forget about Apple and Microsoft, the most
profitable company in the US at present is Linear Technology. The chipmaker designs, manufactures and markets a broad line of standard high performance linear integrated circuits which include high performance amplifiers, comparators, linear regulators, direct current to direct current (DC-DC) converters, battery chargers, radio frequency (RF) signal conditioning circuits and uModule products, amongst many others. Linear Technology, whose customers include British Aerospace, General Electric and BMW, has become profitable by avoiding commodity consumer products and focusing instead on industrial electronics and is working to extend its presence in the defence and avionics markets. And while it might take up to 10 years to design products for its industrial customers, Linear has been one of just a few companies that have been willing to take the risk and stay focused. As Lothar Maier, Linear’s CEO, explained to CIE last year at electronica, “We didn’t close factories or lay off staff during the 2009 downturn. We certainly took some heat from the investment community who thought we should be cutting back - ‘acting decisively’ - but we were financially stable. When you consider the time, effort and money that goes into training our engineers then it seemed, to us, foolish to lay those people off. In fact we’ve found
18 November 2011
ourselves better placed to respond to the recovery than many of our competitors who have been caught rather flat- footed.“
Chips that are sold to industrial or defence customers can command a profit margin of over 75 percent, compared with the more usual 50 percent that is associated with the consumer-electronics market. Linear’s sales are primarily derived from industrial customers who account for 43 per cent of total sales - consumer accounts for just 4 per cent. Ninety eight percent of the company’s 8000 products are proprietary so clients are unable to get them from anyone else.
A few years ago the company was accused of having too broad a portfolio while at the same time not having any star performers.
Maier doesn’t see that as a problem.
“We take a real pride in not having a star performer. We have a lot of little star performers, and our decision to focus on industrial, automotive and
communications does mean that we find ourselves in a more fractured group of markets, such as defence, where performance and value are more important. There are also real barriers to entry in to these particular markets and in a sense that will help insulate Linear from the ferocious type of competition you tend to see in consumer markets.“
Growing use of electronics Electronics are certainly becoming more
Components in Electronics
and more ubiquitous in today's military and aerospace environments and designers for the defence and aerospace industry are incorporating more and more electronics into their designs, whether that’s in ground vehicles, ships, aircraft or satellites. However packing so much electronics into different platforms means that both power and thermal management are becoming important issues that need to be addressed. For Linear the defence market is
increasingly important. While only accounting for 7 per cent of its sales at present, it’s a market the company is keen to develop and expand perhaps to around 15 per cent of total sales. According to Josef Lechner, the company’s European sales director, “At Linear we are in a strong position because we are able to support the extended life cycle of military components. That can be up to 20 years. There are four pillars to our approach and they are delivering quality, innovation, dependability and the management of non-obsolescence. At Linear we have a non-obsolescence policy that maintains the availability of our products for many years - customers can still get hold of products that are over 25 years old. “It’s a vital requirement when it comes to the military and an effective obsolescence policy results in lower lifetime costs for a project; avoids the risks associated with counterfeits sourced from the grey market and helps to reduce the
number of forced and potentially very costly redesigns.”
Rather than traditional power management in vehicles which tend to deal with relatively static loads modern power distribution and management can be extremely complex and difficult to handle. Intelligent power management in the field, where fuel and logistics can be expensive and problematic, are a central focus for military organisations around the world.
Military vehicles have to operate in
increasingly hostile environments and that can and does cause real problems for the electronics on a vehicle. Fine sand can wreak havoc with electronics, blocking fans and filters and causing components to overheat and shut down. At this year’s DSEi in London Linear unveiled a high reliability (MP-grade) version of the LT3512, a high voltage isolated monolithic flyback regulator that is capable of operating over a -55°C to 150°C junction temperature range. This device was developed to help simplify the design of an isolated DC/DC converter and requires no optocoupler, third winding or signal transformer for feedback, as the device’s output voltage is sensed from the primary-side flyback signal. Operating over a 4.5V to 100V input voltage range, it has a 420mA, 150V power switch and delivers up to 4.5 watts of output power, making it well suited for a wide variety of military applications.
www.cieonline.co.uk
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