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Fall 2005

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What They've Learned

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What They've Learned
First in a new series featuring words of wisdom from entrepreneurial alumni

—Charles Creekmore




	Microchip Technology is a publicly traded company that produces more microcontrollers than any company in the world. Microcontrollers are a type of semiconductor, the brains behind everyday items such as automobiles, thermostats, and household appliances. Steve Sanghi earned his undergraduate degree from Punjab University in his native India, and a master’s in electrical and computer engineering from UMass Amherst in 1978.

Moore’s Law* is a kind of a trap that I refer to as the “bleeding edge” of the semiconductor industry. There are only a handful of companies, with Intel at the top, who have made Moore’s Law work to their benefit. For the majority of companies in the industry, Moore’s Law has attracted a huge amount of capital for developing “bleeding edge” technology, while the returns have not been there.

I believe that Moore’s Law is a runaway train. That’s why at Microchip ( http://www.microchip.com/ )we have built a company that stays away from the extreme investments required by Moore’s Law. Last quarter we were one of the most profitable companies in the semiconductor industry, with a 33 percent operating profit—higher than Intel’s. Most of the most-profitable companies in the industry abandoned the chase after Moore’s Law years ago.

A fine CEO has the ability to build a culture of continuous improvement and unleash the power of the people to make rapid improvements in all areas of the business. Plenty of companies with leading-edge innovations in their fields no longer exist, because they could not sustain a culture of improvement to maintain the company in the long term.

I call my method of management “The Aggregate System,” which is also the title of a book I am currently working on that provides companies with a roadmap for sustaining continuous improvement.

I’ve been an American citizen for 29 years now, but my international background is still a benefit to this day. Microchip is part of a very global field. We have 4,000 employees, and half of them live and work outside the United States. So, coming from a different culture, I have a broader scope than the average American.

I can put myself into the shoes of a Chinese, an Indian, a Brit, a Swiss, or a German and build a culture that will have more global and universal appeal.

I have borrowed characteristics from various historical role models. For example, I admire a similar spirit in America’s forefathers and Mahatma Gandhi, who used totally different methods for pursuing the same noble goal. The forefathers went to war to seek their freedom. Gandhi conducted a nonviolent struggle to reach that same end.

I see the merits in both methods, but I can’t subscribe to all the principles of either one. They both worked in their time and fashion.

I once knew a midlevel engineering manager who worked in the States for an appliance manufacturer, which laid him off when it outsourced its production to China. He blamed the loss of his job on outsourcing. Ironically, he didn’t possess one product in his house made in America. Then it turned out that he had actually put one of his suppliers out of business so he could reduce costs for his company by outsourcing those purchases to China. So, by pursuing his own narrow interests, through his own narrow worldview, he had actually paved the way for his own unemployment.

The reason for the shortage of engineers in this country is obvious when you walk into any high school.

American kids are more interested in the latest gossip about Britney Spears or Jennifer Lopez than they are about becoming an engineer or scientist.

You can either complain about the shortage or do something about it. For several years, I’ve been a fundraiser for FIRST, which means For Inspiration and Recognition of Science and Technology. FIRST high-school students solve engineering problems in a very intense, competitive way by building robots they then enter in a national performance competition. Last year, 30,000 students from across America participated in this program, whose ultimate goal is to instill these kids with a lifelong passion for engineering and science. http://www.usfirst.org/

Establish a specific goal in life, or you will never get there. The biggest disappointment in life isn’t failing to achieve your goals. It’s not having any goals to achieve.

Maintain a global worldview. Learn a foreign language, spend a few years working outside the country, learn how to be an internationalist. Then, if outsourcing becomes a problem, you will know how to be a global player and go where the jobs are.

* Moore’s Law is a three-decade-old prediction, which still holds true, that the number of transistors on the integrated circuit will double every 18 months.

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What They've Learned

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