When profits are squeezed or become non-existent, that typically eliminates any company’s ability to fund its future, to invest in new product development initiatives or longer-term research projects. In the semiconductor industry, with its insatiable demands for engineering development resources, any interruption in that flow of innovation funding can have long-term effects.
From our vantage point as a test company, though, we didn’t see long-term semiconductor innovation take a big hit. In fact, based on what we see, the pace of innovation has been rather aggressive in the past year.
The beauty of our industry, the electronics industry, is that it’s fueled by consumers’ never-ending desire for devices that perform better and cost less. The only way to satisfy that demand is innovation – new devices, new displays, new power technologies, new processes, and so on.
At Keithley, we have a front row seat for many of these new technologies. The never-ending churn innovation creates requires a similar call for new measurement technology to verify the latest design of whatever your engineer just imagined on his benchtop. There’s a perpetual need for test in the consumer electronics portion of the industry, because the pace of innovation is so rapid.
So we don’t see innovation being restricted by the downturn. In fact, our customers are still pushing us for new products and new capabilities, in some cases even more so than during a strong economy because they realize innovation in their own labs is the only way they’ll lift themselves out of any slump. And the green innovation drive has accelerated this past year, creating its own momentum for design innovation and therefore test.
The semiconductor industry, from a profit and sales perspective, has rebounded to 2008 levels. So while the pace of innovation hasn’t slowed, it has changed. There are fewer companies today than in ’08, but chip demand remained relatively constant and has been re-allocated to the survivors. In addition, we see more innovation coming from our customers in China today than perhaps five years ago. That’s a newer source of innovation that will only continue to grow, complementing what we see from North America, Europe, Korea and Japan, not replacing it.
