Advanced Analogic Techs (AATI)

Based in Sunnyvale, CA, Advanced Analogic Technologies, Inc. (AATI) engages in the design, development, marketing and sale of power management semiconductors. It supplies power management semiconductors for mobile consumer electronic devices, such as wireless handsets, notebook and tablet computers, smart phones, digital cameras, and personal media players. The power management semiconductors deliver power and regulate voltage, controlling the flow of electrical energy among the various power loads and energy sources in a product or system. These semiconductors are designed primarily as analog circuits to support a wide and continuous range of input and output voltage and current.

Semiconductor devices are broadly divided into three categories: analog, digital and radio frequency (RF). Analog semiconductors condition and regulate real world information such as light, temperature, speed, pressure, power and electrical currents. Digital logic semiconductors process information in only two states. Mixed-signal semiconductors combine both analog and digital technology into a single device. Typically, an analog sensor samples real world information, and then converts the input into an electronic analog signal, which is converted into a digital format for further digital processing. The analog and mixed-signal markets tend to be more varied and specialized, with customized products that have longer life cycles than those in the digital industry segment. There is an ongoing drive to decrease the number of discrete devices, lessen power requirements and shrink the size of the existing devices, which correspondingly increase performance and reliability. Consequently, a greater amount of functionality is being consolidated into increasingly smaller devices. The Gartner Group estimated that the total worldwide semiconductor market was a $219.9 billion market in 2004. The analog market component grew 29% in 2004, to a $36.4 billion market, according to In-Stat, an industry trade group.

Utilities transport electrical energy using an alternating current (AC) scheme, which minimizes energy loss. Semiconductor ICs require direct current (DC) power sources in order to operate, thus the AC power must be converted or transformed into DC. POWI's product line of ICs control, condition or convert electrical energy into a form that can be used to power various devices. The ICs are utilized by other OEMs in alternating current (AC) to direct current (DC) converters, and more recently, in DC-to-DC converters. Power Integrations was a pioneer in the development of a cost effective high-voltage integrated switcher product line that replaced the legacy discrete switchers in the 1990's.

The company offers a portfolio of approximately 480 power management products, comprising power management application-specific standard products and selected general-purpose analog ICs in single-chip and multichip packages. Advanced Analogic Technologies sells its products through its direct sales and applications support organizations, as well as through distributors to original equipment manufacturers, original design manufacturers, and contract electronics manufacturers

Power management semiconductors deliver power and regulate voltage, controlling the flow of electrical energy among the various power loads and energy sources in a product or system. Power management semiconductors play a crucial role in system design because they are critical to battery life and impact the size and performance of a mobile consumer electronic device. According to iSuppli, the voltage regulator and reference power management semiconductor market is expected to grow from $6.1 billion in 2005 to $11.6 billion in 2009, a compound annual growth rate of 17.3%. We believe that demand for power management and voltage regulation in mobile consumer electronic devices will increase.

The market for mobile consumer electronic devices, such as wireless handsets, notebook and tablet computers, smartphones, digital cameras and personal media players, is large and growing rapidly as functionality increases and prices decrease. As an example, wireless handsets, which can incorporate multiple applications such as digital cameras, digital audio, polyphonic ring tones, text messaging, Internet access and decorative lighting, are among the most widely adopted electronic devices today. According to IDC, approximately 826 million mobile phones were sold globally in 2005.

ModularBCD design wins are ramping

Development of new products based on AATI's proprietary Modular BCD technology continued in the fourth quarter. ModularBCD enables efficient integration of fully isolated components operating at different voltages on a single chip. The company now has a dozen new IC designs underway from these products. The first device scheduled for rollout, such as the charger for Bluetooth handsets are now being sampled. These products are expected to ship in volume in 2008.

The firm was encouraged by the strong design-win traction we've experienced across multiple product lines during the first half. AATI reported design wins in new high-profile handsets which have higher expected dollar content than its historical levels. Management believes the robust design win activities speak to new business opportunities we are developing with our recently released proprietary and higher ASP products. Also the introduction of the firm's first high voltage and highly integrated multifunction products also addressed new markets outside of our traditional concentration in handsets.

LG remains the firm's largest customer, representing approximately 29% of total revenue. Sales growth during the quarter was predominantly in their high-end models including design win activity in multiple high profile models, View, Viewty, Venus and Chocolate and Music. Products include 4 and 6 channel charge pumps, multifunction charge pumps, switching regulators and low dropout linear regulators.

Linear Technology filed a complaint with the U.S. International Trade Commission accusing its Sunnyvale, Calif.-based rival of violating two of its patents. Advanced Analogic supplies power management semiconductors for mobile consumer electronic devices including notebook and tablet computers, digital cameras and digital audio players. Linear Technology, based in Milpitas, Calif., said in a statement it is asking the ITC to examine whether Advanced Analogic's power-management circuits violate Linear Technology patents under section 337 of the U.S. Tariff Act.

AATI received a positive ruling although Linear is expected to Appeal the decision.

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