February 28, 2005
Interview with Stephen Maneatis, CEO True Circuits
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Jack Horgan - Contributing Editor

by Jack Horgan - Contributing Editor
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Your customers are going to be embedding your IP perhaps multiple times in a larger design. How do they verify the larger system? What tools do you provide to assist them?

For all of our IP we have standard design deliverable sets that include the typical views. Our deliverables are compatible with all the typical EDA flows out there. We are now in the process of working with several of the verification providers to make sure that our IP is not only compatible with their flows but also certified on them. To date there have been no major concerns for our IP around verification. It's a hot topic, particularly for analog IP, and anyone would be concerned about that. I think that the way our IP is designed, the way it is ported and the way it
is standardized, the whole process gives our customers an immense amount of confidence that what we fully characterize, even if a particular piece of IP hasn't been proven in silicon that what we say it is, is what it is going to be.

Do you have any additional comments?

One of the questions you asked in the previous interview centered about what it is like to start a company and work through the transitional years we have been through over the last couple of years. Being an entrepreneur and establishing a company that is a lead player in its space is immensely satisfying. There's a lot of pride and joy that goes along with it. But being a CEO or founder of a small company that is in a growth space is also an immense amount of work. It takes a lot of physical and mental stamina, not just by me, but by every member of our team. The rewards are out there, both personal and professional. However, it takes individuals who are very driven by the
satisfaction they
get from their area of work and seeing the fruits of their labor materialize into a company that isn't just doing well but one that really matters, one that is really doing good work and that is widely regarded in the industry. The full circle for us is that we, like many companies have been through 5 years of ups and downs with the challenges of the business cycle. We are very much on a solid growth phase right now as the market has definitely picked up and with all the advertising and all of the efforts we have made to build the infrastructure of the company. We are in a very solid position to capitalize on that market opportunity.

Any difficulty in recruiting and retaining people?

Being an analog and mixed-signal player, finding good experienced analog guys is difficult, particularly with the kind of talent and specialization that we are looking for. Recruiting is a challenge. There is a pretty small set of engineers that have the skills and background we are looking for. But they are out there. We're in a hiring mode and continue to look for people who can do what we do.

How many people do you have?

Just under 10 people. Part of our business model is to focus on design and licensing within the company and outsource a lot of the support functions. We have sales reps, PR reps, marketing creative people and so forth that we work with on a regular basis to support a lot of those aspects of what we do.

True Circuits, Inc.

True Circuits develops and markets a broad range of award-winning PLLs, DLLs and other mixed-signal hard macros for ICs for the semiconductor, systems and electronics industries. TCI's robust state-of-the-art circuits, methodical and proven design strategy and its close association with the world's leading silicon fabrication vendors allow the company to quickly and reliably create new and innovative designs
in a variety of advanced process technologies.

China and Luxury Cars

China has the fastest growing economy among major nations, the largest population and a population with pent up demand for an incredible breadth of products. This has led America and European firms to beat a path to their door. China has quickly become the leading consumer of any number of products. Given the political and economic situation in China this has often required forming joint ventures and for many firm making enormous financial investments and putting intellectual property at risk. This has been the case for semiconductor companies and also luxury (yes luxury cars in a Communist country) automobile firms.
It may be instructive to take a quick peak at the luxury car business in mainland China. China's luxury sedan market now has three locally-produced premium auto brands, Audi, BMW and Nissan-Teana.

China's top five automakers - First Automotive Works Corp (FAW), Shanghai Automotive Industry Corp (SAIC), Chang'an Motor Corp, Beijing Automotive Holdings Corp and Dongfeng Motor Corp had combined sales of 3.49 million units last year. These five firms controlled 69 percent of the total sales of vehicles made in China last year, up from 65 percent in 2003.

Ninety percent of car sales in China come from foreign brands. The six top auto brands are Audi, BMW, Benz, Toyota-Crown, Cadillac, Buick and Nissan-Teana. There are only a few home-grown car brands, such as Red Flag of FAW, Chery and Geely. Foreign automakers are only allowed to control a maximum stake of 50 percent in JVs with local partners, according to China's auto industry policy.

Auto sales in China rose 15 percent last year after 76 percent growth in 2003 and a 50 percent increase in 2002. In 2004, domestic manufacturers turned out 5.1 million motor vehicles, and sold 5.7 million entire car units. Both production and sales of vehicles in China are forecast to rise about 10 percent in 2005 to about 5.6 million units according to the China
Association of Automobile Manufacturers. This would place China as number 3 manufacturer of motor vehicles behind the US and Japan. Germany would fall to number 4.

The explanation for the significant drop off in sales during 2004 include the opinion that the two prior years sales were driven by pent up demand, skyrocketing oil prices, customers putting off buying cars in anticipation of further price cuts and government's macro-economic controls. In particular the government clamped down on bank loans to slow the economy. Average prices in the domestic car market fell by about 13 percent last year and by about 8 percent in 2003.

In 2005, China will lower its car import tariff for cars to 30 percent and to 15% by mid 2006 and also abolish its quota system on car import in fulfillment of promises made to the World Trade Organization (WTO). However, analysts do not expect import to increase. On the one hand, almost all global auto giants have established joint ventures in China, and vehicles made in China are not inferior to foreign versions, either in quality or price. On the other hand, foreign auto makers would rather produce car models in China due to China's competitive edge in labor.

Specific examples

Audi, part of the Volkswagen group, sold 64,018 cars in China in 2004, up only 0.8 percent from the previous year. Growth plunged from more than 70 percent in 2003. Audi A6s and A4s are made at Volkswagen's joint venture with First Automotive Works Corp (FAW), China's top vehicle producer. Car sales of FAW exceeded 1 million, 50 percent of which were own brands.

During 2004 BMW sold 95,482 cars in Asia, a record and an increase of 2.6%. However, sales in China fell 10 percent to 24,321 units. In 2003, BMW's sales in China skyrocketed by 176 percent from 2002. BMW expects Asian sales to rise 10 percent to 15 percent this year. BMW is expecting to sell 150,000 annually in Asia by 2008 which will then make up about 11 percent of the carmaker's worldwide sales versus 8.5% today. BMW started making cars in China with Brilliance China Automotive Holdings Ltd in November 2003.

Mercedes-Benz will start to assemble its E and C Class sedans at DaimlerChrysler's joint venture with Beijing Automotive Industry Holdings Corp.

General Motors will begin production of the Cadillac CTS and SRX at its joint venture in Shanghai during the first half of this year.

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-- Jack Horgan, EDACafe.com Contributing Editor.

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