December 2012
VIEW FROM THE TOP

Ted Heil
Vice President, Mini-Circuits Inc.

Q: The importance of sustaining and developing technology has reached a point where states and cities are more actively building relationships with universities and recruiting high-tech companies. Good examples are New York State’s “East Coast Silicon Valley” and several cities in Ohio. However, there continues to be a shortage of engineering graduates, especially those focusing on RF and microwave technology. What would your company do (or is doing) to help promote careers in microwave engineering?

A: I think there are two obstacles that we face in growing the number of microwave engineers. Although the depth of exposure to technology at an early age these days is amazing, the interest point of young students considering a technology curriculum is clearly tilted towards applications, social media and web. RF hardware that is the backbone of wireless communication systems doesn’t receive nearly as much consideration; it is simply a given that we can communicate via a wide variety of means on any given platform. Developing the data pipe is not considered cutting edge; the applications that are delivered by the pipe create the buzz and attract much of the new talent.

A second consideration is the lack of students considering engineering in general. Although there is a national push in STEM programs at the high-school level, I think these efforts have unfortunately met with mixed results. The United States is ranked 30th in math literacy scores and 25th in science. Although the US government has several programs and studies to review the situation and recommend solutions, these solutions appear to be variations of traditional government education programs that have had little impact. I personally believe the solution has to be one that encourages industry to engage at an even earlier stage, when we can influence students to enter a STEM curriculum. We see this in Malaysia where the local high-tech community is deeply involved at the high school level. Mini-Circuits Malaysia is part of the local community sponsoring science exhibitions and entrepreneurship programs. These programs are initiated and supported by the school boards, but organized through industry. This approach is proving successful, and gets accomplished with industry funding, bypassing the political paralysis typically associated with most government spending.

Q: For those of you serving the military market, what do you expect 2013 will bring in terms of opportunities in this sector?

A: Although Mini-Circuits is fortunate to serve a wide range of end markets, many of our products currently support and continue to be designed into both domestic US and international military applications. Heading into 2013, we are facing a tremendous amount of uncertainty in spending on US defense programs. Like all of your readers, even those remotely associated with defense spending, the big question looming over the forecast for next year is the potential impact of sequestration. Congress has a fixed timeline to address the budget issues before a cut of 9.4 percent in nonexempt defense discretionary funding is enacted. The Sequestration Transparency Report issued this past September gave little insight into programs that could be affected by the cuts; however, it did state that sequestration would result in “delays in investments in new equipment and facilities, cutbacks in equipment repairs, declines in military research and development efforts”.

If our leadership in Washington manages to avoid these automated cuts, in terms of domestic US Defense programs we can expect opportunity patterns similar to 2012. Having already worked through the decline in ground based electronic counter measures and the rationalization of a number of questionable programs, we are currently experiencing what we believe is a more sustainable level of business. In general terms, we expect to see continued evolution of legacy systems, i.e. new electronics on old platforms. Although we may not see additional F-35’s, there will be F-16 upgrades for both domestic US and international fleets. Satellite and radio communications demand remains stable, but even in these markets new programs are focused more on upgrades and retrofits. The UAV market continues to grow in support of the various international missions as well as domestic interdiction, which means development of RF electronics systems whether they are communication-based, active or passive.

Q: If your company serves the commercial markets, are you encouraged by any particular emerging application or technology?

A: We are pleased to see continued traction in several commercial areas. In the wireless space, LTE buildouts in both Asia and the US market are encouraging. These small-cell solutions increase demand for base station equipment as well as the backhaul needed to access these sites, raising demand for new products in bands up to 50 GHz. This has created applications for our higher frequency MMICs which we are releasing later this year, as well as for our more traditional products supporting intermediate frequencies. Our development efforts in 75 ohm products have paid off as we see continued expansion in the broadband and optical markets creating demand for enhanced capability in both the forward and return paths. All these developments continue to drive test and measurement development for both R&D and automated production test equipment. We have seen a lot more aggressive development in the production test area through our sales to production test OEM’s, and in the acceptance of our own function-focused test equipment product line.

Q: Last year, we asked what impact the global economic crisis was having on the markets you serve and on how you run your business. What is your current perspective?

A: For companies that support infrastructure equipment, whether it is commercial or defense based, the recovery from the global economic crisis has been slow, stalled or never happened as in the case for Europe. Our perspective is that the global economy will continue to recover at a slow pace, but there are some dangerous curves to navigate in the near to mid-term in order for us to maintain the minimal improvements we expect, such as the management of both European and United States debt and the leadership change in China.

From a Mini-Circuits perspective, we are very fortunate to be diversified across regions, markets and customers. Our base business can be viewed as a broad market indicator reflecting the broader macro-economy. Given that, our strategy remains the same: to be intensely focused on supporting our customers with outstanding quality, superior speed and service, and putting new products on the market that offer performance and price advantages. We create our own opportunities for growth beyond the broader market, through increases in market share via new product lines, performance advances in several key product lines, and finding new ways to further improve the customer experience.

For example, our new No Hassles sample program will soon encompass most of our surface-mount products, getting samples into our customers’ hands more quickly than ever. And our Small Quantity Tape & Reel program is gaining traction with customers by eliminating hidden costs, employing full leaders and trailers for immediate use, and reducing inventory requirements.

Sales of our Low Noise MMIC Amplifiers continue to grow, as customers fully leverage the advantages our combination of low noise, high linearity, and low DC power delivers. In fact, across the board, our industry-leading performance/price ratios help us to hold onto, and even increase, market share during difficult economic times. We’ve had to increase production of our new portable test equipment lines, and more customers are turning to us for purpose-built rack-mount production test equipment for better speed and the performance they need, day after day after day.

Q: What countries or regions do you believe will provide the greatest growth potential for the wireless industry in 2013?

A: In discussing the growth prospects for the wireless industry, I think you have to separately consider infrastructure and subscriber equipment. Growth in the consumer market appears to counter the broader macroeconomic trends, as evidenced by smart phone sales and the take-up of newly released models. Infrastructure equipment sales, where Mini-Circuits is focused, are more closely tied to the macroeconomic climate. In this perspective, we view Asia as offering the best prospects for growth in the coming year. In spite of conflicting economic data, China’s annual GDP growth should remain above 8%, and all of East Asia at around 7%, offering the best prospects for continued growth. For example, China Mobile has identified the first trial cities for TD-LTE and expects to rollout nationwide coverage in 2013 to 2014, with a tremendous increase in base station installations and supporting backhaul.

At Mini-Circuits, we have made significant investment over the years to better support the Asian markets with more Field Applications Engineers, global IT systems, and distribution centers in India, Taiwan, and China by the end of this year. Our relationship with the customers in this region are outstanding and they push us to help them become better, stronger, and more competitive, whether in their local markets or on a global scale. ♦