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Engineer-entrepreneur challenges market rules

Posted: 01 Jan 2006     Print Version  Bookmark and Share

Keywords:phison electronics  taiwan  pen drive  mmv  serial controller chip 

Phison Electronics Corp. started in a small office at the International Technology Research Institute's Incubator Center in November 2000. In its fourth year, the IC design company had more than Rs.548 crores revenue with a CAGR approaching 200 per cent. The company is publicly listed and has become in itself a legend in the Taiwan IC design industry.

After the advent of flash disks in 2000, Phison Electronics developed the first pen drive in May 2001, earning about Rs.18.1 crores ($4 million) in the same year. With this, the company's revenue further surged to Rs.112.22 crores ($24.8 million) in 2002 and Rs.333.95 crores ($73.8 million) in 2003.

Aside from the pen drive, Phison Electronics also developed serial controller chips for MP3 players, memory cards and card readers, thus gaining more market share. Leading the company in the Taiwan chip design arena is Khein Seng Pua, general manager and co-founder of Phison Electronics.

For Pua, a good CAGR is a big challenge for any new IC design house. Pua chose a different strategy from that of his competitors—he does not care about margins. "I'm just interested in the revenue targeted by our company. If I cannot keep the margin, I will cut prices as needed," he said.

The company offered SD card controllers for as cheap as 45 cents in Q4 of 2005. According to industry analysts, companies usually suffer a loss when the margin drops to 20 to 30 per cent. But Pua doesn't mind, saying, "variety of designs is key to making profits for small IC design houses."

"We provide services even to small orders, even if small companies can't pay much. We are in a win-win situation with collaboration," Pua said.

Phison represents flexibility, as it plays not only the role of an IC design house with its own memory controllers, but also surfaced in the emerging multimedia viewer (MMV) market in 2005. The company provides design services for customers wanting to extend their MMV product line.

"Except for Texas Instruments' DSP core, we develop our own hardware and software, including the A/V codec, applications and PCB layout," Pua said. He pointed out that costs are higher when you obtain a total solution from large semiconductor suppliers. "Much has to be invested in r&d resources. Accumulating your own technical resources will result to more profit in the long run."

Over half of Phison's 180 employees are R&D engineers. They currently own over 70 patents in Taiwan, China and the United States. Because of Phison's R&D ability, it has obtained almost Rs.13.58 ($3 million) funding from Toshiba Corp. "The investment is worth it for Toshiba because we earned much for them," Pua said.

- Joy Teng
EE Times—Taiwan

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