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Agilent Sets Out Its Consumer Vision For Future Profitability

Increasing its market share in power amplifiers and creating opportunities for its daughter company Lumileds are two of the strategies that Agilent's semiconductor product group will use as it looks to increase revenue from consumer electronics applications. Michael Hatcher reports.
Agilent Technologies is a rare bird: a chip manufacturer that is targeting a whole range of III-V applications, including fiber-optic communications, power LEDs (through its part-subsidiary Lumileds) and GaAs-based RF components.

Considering the breadth of chip technologies developed and manufactured by the California-based company - which is also the leading supplier of silicon CMOS imaging chips with an 18% market share - its profile in the public consciousness is virtually non-existent, and certainly nothing like that of its parent company, Hewlett-Packard (HP).

Agilent feels that this is especially true when it comes to its semiconductor operation. At January s annual gadget-fest in Las Vegas, the International Consumer Electronics Show (CES), executives from the company s semiconductor product group (SPG) were at pains to raise Agilent s profile.

While Young Sohn, CEO of Agilent s SPG, said that the group regards itself as "unknown" in the consumer electronics field, it is clear that this market is going to be critical to the operation s future growth and profitability.

Turning the corner

Just a couple of years after Agilent was spun off from HP in the boom of 1999, the SPG suddenly found itself in a much tougher business environment than it might have expected. Now with around 6000 employees - some 24% fewer than in 2001 - Agilent SPG has cut costs drastically and, after turning a corner in 2003, has been profitable for the past 18 months.

Expertise in analog chips, and in particular optoelectronic components, is the foundation of the business, which is now preparing itself for rapid growth. With revenue of $1.7 billion in 2004, Sohn and colleagues have set themselves a stiff challenge: to drive sales up to $3 billion by 2008. To do this, the company will need to take market share from its competitors across the entire range of applications.

While fiber-optic communications is one area where Agilent has traditionally been very strong, the company clearly sees consumer electronics as the way forward. Sohn s view is that the phenomenal progress made in digital electronics in recent years means that the spotlight has now swung back onto analog devices used in imaging, display and information-transfer applications.

The RF and microwave sector is probably Agilent s weakest application area, where the company ranks itself ninth among global suppliers, and has a market share of only a few percent in what Sohn admitted was a very tough market. This does of course give the company plenty of scope to steal market share from its rivals, and Agilent s recent move to acquire the Korean power-amplifier (PA) module specialist Wavics will have sent out a signal of intent to the rest of the industry. Wavics is a fabless company based in Seoul whose PA modules are said to reduce battery drain in cell-phone handsets.

On the technological front, Agilent reckons that its E-PHEMTs, detailed in these pages in May 2004, will challenge HBT chips. The key advantage, it says, is that of extended talk time allowed by PAs based on the technology. The high linearity of the devices makes them particularly good for the more complex front-end electronics used in more advanced cell phones. E-PHEMTs are manufactured at Agilent s 6 inch GaAs fab in Fort Collins, CO, and the company has recently released E-PHEMT FETs for base-station applications.

But with its dominant position in CMOS imagers, the camera cell phone is Agilent s core strength, and now its daughter company, Lumileds, is looking to exploit this leadership as the camera s performance improves. That s because the more pixels there are in an imaging chip, the more light is required to generate sufficient illumination for taking high-quality photos. Xenon lamps currently provide the flash function in such phones, however Lumileds has worked hard on improving the brightness of its white LEDs.

Having developed the chip design to support a junction current of around 1 A, Lumileds believes that it is well on the way to making its LEDs competitive with xenon lamps. And because imaging and illumination technology go hand-in-hand, Lumileds has a straightforward route into the market through Agilent s existing leadership position in handsets.

Camera flash was one of many power-LED markets identified by Mike Holt, CEO of Lumileds, during Agilent s vision summit at the CES. He also pointed to automotive applications as a large existing market for red power LEDs in products such as high-mount stop lights. Despite the 50 million new cars sold every year, however, Holt said that this sector had "kind of plateaued", with the relatively high cost of the technology still proving to be a barrier for introduction in vehicles that are made in very high volumes.

Lumileds now has a partnership with its other parent company - Philips - that is focused on developing more LED-based lighting systems for automotive use.

Rebirth of Trinitron

Holt identified two key consumer applications in Las Vegas: illuminators for personal hand-held projectors; and backlights for large LCD televisions. 450 Luxeon emitters provide the backlight for Sony s top-of-the-rage Qualia televisions, and Holt did his best to wow the CES delegates with the dazzling color reproduction that the technology provides. He said that Sony believes that the technology will be the "rebirth of Trinitron".

Trinitron is the advanced cathode-ray-tube technology developed at Sony that led to the company s dominance of the television market in the 1980s. The latest high-spec LCD televisions featuring the three-color LED backlights are only available in Japan at present, but Holt hinted that Sony might release the televisions in the US shortly.

While many of the applications it is focused on lie in the future, Lumileds is already enjoying rude financial health. According to Philips, the joint venture made a profit of $62 million from total sales of $280 million in fiscal 2004. That represents a 43% year-on-year growth - in line with the expansion of the overall high-brightness LED market.

Meanwhile, Agilent Labs - the R&D facility that is charged with coming up with the SPG s next-generation products - has some innovative ideas in the pipeline. These include an LED-based eyeball-tracking system that is designed to monitor and warn drowsy drivers, and a range of fiber-optic systems, including a prototype 500 Gbit/s optical "engine".

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