Ted Heil, President, Mini-Circuits
MPD: The 2019 defense budget is chock full of EW, radar, and other programs with lots of RF and microwave content, so, if your company serves the defense market, what are your thoughts about how this will affect your business in the coming years?
Defense and aerospace applications are an important part of our business. The substantial increase in defense spending over the last several years has had a positive impact on growth at Mini-Circuits. We’re convinced that this trend will continue through at least 2020, and although published defense budgets are reasonable early indicators, the investments in capital expenditures and hiring at nearly all of our defense customers give us confidence that the recent growth is not a short-term event.
As a result, we expect demand for our high frequency, wideband products to continue. Our development focus into the milimeterWave range currently includes MMIC amplifiers up to 43.5 GHz, as well as MMIC splitters covering 10 to 43.5 GHz, MMIC directional couplers covering 5 to 43.5 GHz, and coaxial distributed amplifiers up to 40 GHz.
We’re also aware of the impact product obsolescence has had on our defense and aerospace customers despite growth in budgets and spending. Consolidations, especially among semiconductor suppliers like Hittite and Analog Devices, Avago and Broadcom have created waves of disruption throughout the defense electronics community. Mini-Circuits is well positioned to support defense and aerospace customers because of our longstanding commitment to minimize disruptions from EOL components. Our business model is to support customers through the life of their system, including those with long lifecycles, which is typical in defense and aerospace applications.
MPD: 5G is already generating revenue for some sectors of the RF and microwave industry, and this should increase next year. How do you think the implementation of 5G will affect business in the coming year?
Our customers have already deployed successful small-scale 5G trials and are moving to larger implementations in 2019. This is only going to accelerate as we approach full market deployment. Since many of the bands are in the low milimeterWaves, this will drive revenue and profits for companies offering products in these frequency ranges.
Ultimately, we think the bulk of revenues for 5G RF technology will be dominated by highly integrated silicon solutions, limiting the number of companies who can participate in both base stations as well as subscriber units. However, we do think there will still be demand for less application-specific, multi-market products to facilitate the test and deployment of these integrated solutions.
To support our customers in this space, we are working on a number of new products, including the MMIC products I mentioned above, a growing offering of coaxial passives up to 65 GHz, and advanced packaging technologies for surface mount solutions through 50 GHz. We’re also introducing a new line of waveguide products to support customers with OTA testing for larger scale trials and other applications up to 100 GHz.
MPD: Overall, how would you compare the health of the industry compared with years past?
I think it is clear to most observers that the markets for RF products continue to improve. Most of our peers had a great 2017 and many are seeing that success continue into 2018. Demand is heavily driven by defense spending and development for 5G. Any time multiple big markets move in a positive direction, it has a significant impact on the health of the industry.
On the other hand, all this growth has stressed the talent pool of RF engineers; the number of RF engineering graduates should be a major concern for the long-term health of our industry. From our observations, RF/microwave coursework occupies a declining share of an already overcrowded Electrical Engineering curriculum. The net result is fewer graduates to fuel the future growth of our industry.
This talent deficit represents a real challenge and one that is difficult to address. At Mini-Circuits, we are endeavoring to make the experience for students who do engage in microwave courses more meaningful through our University Outreach Program. By working directly with students and professors to develop hands-on learning resources and project kits, we hope to help foster a more practical understanding of the subject matter and better prepare graduates for careers in our field. This year we released our first project kit, and we’re developing a series of projects that can be used in core microwave, sensing, imaging, and signal processing courses. Ultimately, we hope to influence universities to maintain and expand RF/microwave coursework in their curriculums to cultivate the technical talent that will support the growing need for innovation in wireless technology.
MPD: What RF and microwave technologies will be driving the industry in 2019?
It will be upward and onward with respect to frequency as we approach the 5G rollout. As I mentioned earlier, the high-volume markets for handsets, femtocells, and picocells will be dominated by highly-integrated silicon chipset solutions. Although this is not a Mini-Circuits’ focus, we believe there is a substantial market for products on the periphery of these integrated chipsets, like transformers, filters, and other discrete components. Wideband, multi-market products supporting the test and measurement needs for 5G will also be in demand in the coming years.
Additionally, for non-silicon technologies like GaAs and GaN, SMT packaging is going to be the most significant challenge to meet the cost and capacity demands of wideband applications. Today, many assemblies in these bands are still hybrid chip-and-wire, which is a very costly solution. Existing packaging solutions face the challenge of performance degradation due to molding compounds and wire bond inductance. Addressing this problem is a major area of investment for us, and we’ve filed patents on novel packaging technologies that will enable us to house new and existing die in surface mount packages and perform up to 50 GHz. We believe this capability will allow our customers to both increase capacity and reduce the costs of wideband milimeterWave systems in the future.