Media Focus: Beyond All Possibilities, Uncovering ADI’s Innovation Code
Many startups start their first office in their home garages. The legendary companies that everyone knows, such as Apple, Google, and Amazon, are typical examples. Sometimes their entrepreneurial stories are even more talked about than their products. There is a semiconductor technology giant that has lived longer than the above companies: Analog Devices (ADI for short). It was also founded in a simple little room. In 1965, the two founders, Ray Stata and Matthew Lorber, rented a basement in an apartment building in Cambridge, Massachusetts. Starting from a simple laboratory, the two built their engineering kingdom brick by brick. According to statistics, the average lifespan of the world's top 500 companies is about 47 years, and now ADI has been around for more than half a century. It is not only a company with a market value of 30 billion US dollars, but also one of the most outstanding leading suppliers in the global semiconductor industry.
In the 1960s, the entrepreneurial dream of ADI's two founders, Ray Stata and Matthew Lorber, began in a simple laboratory.
After reading this, you may ask, what exactly are ADI's products? The average reader may feel unfamiliar with ADI, but in fact, we can find ADI everywhere in our daily lives. Everything we wear, wear, watch, use, and ride, from aerospace to polar exploration, from taking close-up shots of Mars to playing the Nintendo Wii game console in your hand, the technology and product drivers behind it all come from ADI. ADI's chip technology application is like the heart of the device, with very important functions but rarely seen. The low-key ADI can be said to be a true hidden champion company, working silently, like a duck paddling in the water, seemingly silent but able to stir up ripples.
If the most impressive symbol of ADI is its simple triangle logo, it is said that its design concept is inspired by the voltage and current engineering symbols of its early product: operational amplifier. One of the key circuits in the instrument is the operational amplifier, which largely determines the performance of analog instruments and systems. Ray Stata recalled that when ADI was first established, the industry had not yet invented integrated circuits, commonly known as IC components. At that time, they still had to manually assemble scattered transistors and other components on printed circuit boards. But two years later, when IC came out, most of the company's directors did not want to change their strategy, but Ray Stata insisted on innovation. Looking back many years later, it was fortunate that this decision was enough to establish ADI's leading position in the high-performance integrated circuit industry. Now looking at ADI's product line, from aerospace, automotive, communications, consumer electronics, energy, healthcare, industrial automation, industrial sensing, instrumentation to the Internet of Things, from heaven to earth, the fields covered by ADI products are really countless with ten fingers.
When ADI was founded in 1965, its corporate logo consisted of a triangle, and its design concept was derived from the engineering symbol of an operational amplifier.
"MIT is the foundation of my entrepreneurial journey. When I saw other people's entrepreneurial examples, I thought if they could do it, I could do it too." Ray Stata recalled his entrepreneurial journey of more than 50 years. In Taiwan, everyone must know TSMC and Morris Chang, who support half of the technology wafer industry. The influence of ADI on the United States and even the world in promoting analog technology is beyond words. What a wonderful fate is that ADI founder Ray Stata and Morris Chang happened to be MIT alumni. They are three years apart in age and have a senior-junior relationship. It is imagined that they may have passed by each other on the MIT campus and even took the same courses together.
In 2015, ADI celebrated its 50th anniversary by ringing the bell at the Nasdaq Stock Exchange in the United States.
ADI started from a shabby laboratory, developed only three products at the beginning, and recruited 46 employees along the way. After 53 years of refinement, ADI has now grown into a leading enterprise with 120,000 customers, 4,700 patents, 20 countries, and up to 15,000 employees. Looking at the financial report, the revenue has grown nearly 10,000 times from 574,000 US dollars that year, to 5.2 billion US dollars last year. Seeing this, absolutely no one would think that ADI's success came from luck.
ADI Chairman and Co-Founder Ray Stata Returns to MIT as an Alumnus to Address Graduates
Currently, ADI's revenue gross margin is over 65%, and its operating profit margin is around 35%. Such a stable return rate allows the company's system to develop healthily. In addition, 96% of ADI's products can be provided to customers within six weeks, which not only tests supply chain management, but also represents continuous innovation, allowing ADI and its customers to gain competitive advantages. Vincent Roche, President and CEO of ADI, once said:
"For a company to maintain sustainable development, three elements are needed: one is rapid learning; the second is perception of change; and the third is to pass on the company's core values and culture."
As a representative manufacturer of the semiconductor industry and the second largest analog IC market share in the world, ADI has a history of more than 50 years. It has not been smooth sailing without challenges. The company has also experienced various transformation pains. But why can ADI stand firm in the industry ? In 2011, the Boston Globe wrote an article describing this company: "ADI is far ahead, even its competitors are far behind. For a long time, ADI has been committed to developing more precise and faster products, and is a well-deserved industry leader." Whether in the ADI brand white paper or the official website, ADI tells us that their value always emphasizes "Ahead of What's Possible Beyond All Possible".
However, have you noticed that technology is making society change faster and faster? To be more precise, the changes in technology are developing in leaps and bounds. Some industry authorities say that under the influence of Moore's Law, semiconductor innovation is coming to an end. In other words, semiconductors are limited by the laws of physics. With the 16 nm, 8 nm, 4 nm, and 2 nm semiconductor process technologies, many people wonder whether Moore's Law has reached its limit? But this has not yet been determined. However, many electronic instruments and equipment for precise measurement in the industry use ADI's technology and components in large quantities. Will ADI's innovation also be limited by Moore's Law and stagnate? As the current helmsman of ADI, Vincent Roche publicly and firmly told everyone: "Of course not! My answer is quite certain."
Looking back over the past 60 years, the development of global communication technology ICT has experienced three typical changes: the mainframe era, the personal computer era, and the Internet of Things era. The physical world and the digital world continue to interact and penetrate each other. Today, we live in a society where we can communicate and collaborate with anyone at any time. Innovative technologies such as artificial intelligence, virtual reality, and augmented reality are inseparable from semiconductors, and people's interest in semiconductor innovation will only increase, not decrease. However, as Moore's Law has reached its sub-micron limit, ADI's strategy of announcing to the world "Beyond Moore's Law" will be the next wave of ADI's evolution.
Vincent Roche believes that ADI must continue to deepen its efforts in the technical field, physical system level, and technology application complexity in order to continue to promote future innovation . ADI continues to surpass all possibilities in three indicators: first, becoming a leader in a certain technology; second, focusing on vertical fields; and third, having the ability to think systematically. These three capabilities combined will also achieve "Beyond Moore's Law". ADI continues to work hard to connect the analog and digital worlds and find application solutions for more needs of human society.
For an enterprise to go from domestic to international, from a latecomer to a market leader, for ADI, every stage over the past fifty years has forced itself to step out of its comfort zone and continue to evolve boldly, whether it is innovation or working with partners to create an ecosystem. From the 1960s, when it boldly sought opportunities, to the 1970s, when it entered the cross-industry market, from outer space exploration to ATARI video game consoles, it has driven changes in various industries. In the 1980s, ADI responded to the rise of the machine age and triggered another wave of innovation in the consumer, communication and computing fields. In 1990, it began to embrace digitalization and invested in DSP (digital signal processing) development. At that time, the Internet was mainly connected by MODEM modems. ADI's high-performance converters and digital signal processing were widely adopted and led the way.
After entering the 21st century, ADI entered its fifth decade. During this period, ADI sold its 100 millionth iMEMS accelerometer. Even NASA used ADI's high-performance digital-to-analog converter to send the largest and highest-resolution camera in history into orbit, taking 20,000 x 40,000 pixel images of the surface of Mars. After 2010, facing the Internet of Everything, ADI set a new goal for itself: to use breakthrough sensing, measurement and connection technologies to connect the real world and the digital world in an intelligent way. This also means that from chips to software to the cloud, ADI relies on high-performance technology and strategic cooperation strategies.
As senior vice president and chief technology officer of ADI, Peter Real often says: "You have to know when to lead, when to follow, when to invent together, and when to collaborate." ADI knows that to break Moore's Law, it must rely on the ecosystem to innovate. As Vincent Roche said, "The challenges we are facing today are beyond the capabilities of a single supplier. In the face of increasing complexity, we want to coordinate this environment and align technical solutions with market needs. Cross-ecosystem cooperation will become increasingly important." The so-called partnership promotion includes many forms.
For example, Phoenix Contact and ADI have joined hands to form a strategic partnership. For many years, ADI and Phoenix Contact have been committed to the realization of Industry 4.0 by adhering to the concept of cooperative innovation. Phoenix Contact started to invest in digital isolators using iCoupler® technology very early, relying on ADI products to overcome the challenges of size constraints. In this process, ADI seized the opportunity to increase R&D efforts, optimize solutions, and further improve performance. Today, as Phoenix Contact's I/O design size continues to shrink, ADI continues to shorten the design cycle and provide key support covering the entire signal chain.
There is another form of strategic cooperation: acquisition. ADI's acquisition of Linear Technology Corporation in 2017 was the event of the year. The two first-class high-performance analog companies joined forces. ADI has innovative advantages in converters, amplifiers, RF and microwaves, MEMS, and DSP; Linear is good at power management and amplifier layout. Due to the extensive and highly complementary product portfolio, the revenue created by the two giants after joining hands has become the leader in many fields. Including dominating the world in converters and RF/Microwave, and being the second in power management, amplifiers, and user interfaces. Providing new value to customers through the best performance combination, including wireless current detection for industrial Internet of Things, amplifier driving high-speed SAR ADC, single-cell or dual-cell booster for ultra-low power MCU, etc., as well as Power by Linear™ series of power management and conversion application solutions, with high-performance ICs that can be applied to the automotive, telecommunications, industrial, medical health, computing and high-end consumer electronics markets, it is the industry's leading solution provider for power management and conversion products.
In 2017, ADI acquired Linear Technology Corporation, realizing the win-win corporate strategy of 1+1＞2!
The story of partners is not over yet. With the promotion of new intelligent applications, we see more innovations from ADI and more progress in cooperation with partners. Whether it is detection technology applied to unmanned vehicles and smart factories; energy innovation in communication systems; or innovation in the field of AR through 3D sensing technology and video monitoring, ADI's "innovative hand" continues to compose one new story after another.