Burr-Brown Corporation

views updated

Burr-Brown Corporation

6730 South Tucson Boulevard, #BC-7
Tucson, Arizona 85706
U.S.A.
(520) 746-1111
Fax: (520) 889-1510

Public Company
Incorporated: 1956 as Burr-Brown Research Corp.
Employees: 1,900
Sales: $269 million (1995)
Stock Exchanges: NASDAQ
SICs: 3674 Semiconductors & Related Devices

Burr-Brown Corporation designs, manufactures, and sells a broad line of microelectronic components, especially high-performance integrated circuits (standard analog and mixed-signal) used in the processing of electronic signals. For example, its integrated circuits help guide robots in Japanese automotive assembly lines and help control locomotive engines in Germany. Burr-Brown products are found in numerous areas: industrial and process control, test and measurement, medical and scientific instrumentation, medical imaging, digital audio and video, telecommunications, personal computers, and multi-media systems. The company’s manufacturing and technical facilities are located in Tucson, Arizona; Atsugi, Japan; and Livingston, Scotland. Its worldwide sales organization markets the company’s products in 45 countries.

Humble Beginnings

Burr-Brown began in 1956 in founder Tom Brown’s 400-square-foot garage in Tucson, Arizona, and from its founding it was concerned with the manufacture and sales of microelectronic components. That year it incorporated in the state of Arizona as Burr-Brown Research Corp.

With the help of two employees, Brown, who was a real estate developer, was able to market his first analog products. First-year sales totaled a modest $1,600 dollars, but within a year Brown moved his operations to a 1,200-square-foot building, and sales grew to $7,200. As sales increased, the company continued to move into larger facilities, and in 1965 Brown bought ten acres near the Tucson airport so that he could create a permanent location for his growing business. His first building there, a 22,000-square-foot structure, housed more than 150 employees.

By the early seventies Burr-Brown was a major presence in the Tucson area. It was, in fact, only the second major high-tech manufacturing firm to establish its headquarters in the city (Hughes Aircraft had come to Tucson in 1951). This presence in the city was reflected by the company’s new buildings. In 1970 Burr-Brown constructed near the airport a second building, this one with 52,000 square feet of space for production and management. That year sales topped $6.6 million, and the number of employees rose to 300. By 1975 it became necessary to expand the Tucson facility with a third building (until it was constructed, the company leased space around the airport). During the 1970s sales increased at a rate of about 25 percent a year, and by 1980 Burr-Brown was operating in Tucson in 94,000 square feet of space. Sales had surpassed $50 million. At this time in its history, Burr-Brown was making more per working minute ($2,300) than it made in its first year of operation.

During this period of expansion Burr-Brown also began to sell its products overseas. It first entered the international market in 1961. A decade later it established a subsidiary in the United Kingdom, and four years later it created a Japanese subsidiary. By 1979, 50 percent of sales were outside the United States.

Growth and Expansion during the 1980s

Burr-Brown experienced healthy growth during the early and mid-1980s, a time when many other companies in the industry “were forced into cutbacks, layoffs and even bankruptcy,” wrote Kathie Price in The Arizona Republic. ‘The catalysts for Burr-Brown’s success,” she said, were “in its choice of products and markets.” The strategy, one initiated by Tom Brown years before when he was starting out in his garage, was to locate “profits in such small-volume computer components as circuit boards, integrated circuits, digital-to-analog converters that change digital (numeric) signals to analog (sound wave) signals and personal-computer instrumentation.”

Also important to the growth of Burr-Brown was Jim Burns, who was hired in 1971 to oversee the daily operations of the manufacturing facility. Burns had spent 11 years as a Motorola manager before joining the company. Burns won praise from his employees and outsiders alike for keeping Burr-Brown competitive in the global market. His attitude was simple. Burns said, “We saw that more than half the population of the world was outside the United States. We just believed the market was there.” He also refrained from bashing foreign competition. “Should we punish the Japanese,” Burns asked, “for having good old American values?” His approach for Burr-Brown was to “look for niches with minimum competition.” “It might not be something special,” Burns explained, “but a market area that’s fragmented or where the competition is weak.” Rather than challenge giant corporations with greater resources, Burns used a cooperative approach with larger companies. Burr-Brown was able to find solutions for difficult problems that larger companies could not.

Burr-Brown’s early entry into the Japanese market made it possible for it to develop parts for new Japanese products. In 1978, for example, it helped Sony with its compact-disc player. Burr-Brown’s integrated circuits converted digital signals to analog signals in these electronic devices; in so doing they produced tone qualities from compact disks that surpassed those in tapes and records.

Another aspect of Burns’s approach helped Burr-Brown succeed in the Japanese market. Burns believed in the simple method of listening carefully to the customer’s problem and then searching for solutions. At the time the compact disc was developed, for example, there was not a single chip on which to put the new technology. As a result, Burr-Brown used existing technology to create a multiple-component integrated circuit. “We did that,” Burns said, “rather than say no and have the Japanese later figure out how to do it on a single chip.” Not many years later, in 1983, Burr-Brown developed a single integrated circuit, or chip, for the compact disc.

In 1983 Burr-Brown incorporated in the state of Delaware, and the company changed its name from Burr-Brown Research Corp. to Burr-Brown Corporation. In March of the following year Burr-Brown went public, abandoning its long-standing policy of reinvesting profits back into the company. One reason for this change was that a major competitor, Analog Devices of Norwood, Massachusetts, was beginning to overtake Burr-Brown. When Tom Brown realized that Analog was outpacing them, he decided the company needed an infusion of new capital—something that going public would bring it. The change proved a boon to Burr-Brown. The year it went public, Burr-Brown reached $66 million in sales, a company record. Burr-Brown also wanted to increase its presence in the lucrative European market, and soon after it became a public company, it was able to build a new manufacturing plant in Scotland. In 1986 a technical facility was built thirty miles from Tokyo. By 1987, 65 percent of sales were in international markets. But despite continued growth, Burr-Brown’s profits were not al-ways high. Costs in the construction of new facilities and the consolidation of divisions affected the bottom line in some years.

Because of its notable successes, Burr-Brown’s visibility in Arizona continued to be high. In 1984 the company was named “Arizona’s Growth Company of the Year” by the Phoenix chapter of the Association for Corporate Growth. Much later, in 1995, it was at the top of the list for Arizona Inc. “Best of Business” ranking. But elsewhere—and, in particular, Silicon Valley—Burr-Brown’s visibility remained low. Dan Hutcheson, president of VLSI Research Inc., was quoted as saying that it was tough for Burr-Brown to be isolated in Arizona “because there’s not this electronics infrastructure where you can go out and mingle with your customer every day.” Even so, Hutcheson said, Burr-Brown by the 1990s had “a nice, stable work force with a good work ethic.”

Company Perspectives:

The company excels in the design and manufacturing of ICs (integrated circuits) used in signal processing associated with the measurement and interpretation of “real world” phenomena such as sound, pressure, temperature, distance, and light. By combining specialized design and application knowledge with advanced semiconductor process technology, the company creates products which are highly proprietary in nature. The high value-added content of these products makes them more resistant to redesign in customer systems and less susceptible to second sourcing and commodity pricing that often affect digital ICs.

Historically Burr-Brown has developed a very strong position in the stable industrial process control and test and instrumentation markets, which are characterized by long product-life cycles and high margins. The company will continue to emphasize these markets in order to protect its position and expand market share.

The company has been able to leverage capabilities developed in these more traditional markets to penetrate very large, fast-growing markets, such as communications and computers and multimedia, for which high performance analog and mixed-signal products are particularly well suited. Increased emphasis on cost-effective solutions to customer applications in these markets benefit profitability in all markets. By pursuing this strategy, the company intends to accelerate total revenue growth while expanding overall profit margins.

Innovation and Innovators: Growth through the 1990s

Two other key factors—new product development and skilled engineers—have led to Burr-Brown’s success over the years. At Burr-Brown new-product development strategy has been based on a twelve-year life span, with each new product designed to return that investment within five years. This strategy was one reason for Burr-Brown’s remarkable annual growth rates in the 1970s, which reached as high as 50 percent. In the early 1980s, 25 to 35 new products a year were introduced. New products were also a contributing factor in the company’s record sales during the 1980s.

Finding skilled engineers was simplified by Burr-Brown’s location near the University of Arizona in Tucson and Arizona State University in Phoenix. The University of Edinburgh supplied many of the engineers needed at the Scotland facility. Some of Burr-Brown’s engineers have been recognized within the industry. Jerry Graeme, for example, received the 1994 “Innovator of the Year” award by EDN magazine. In his 25 years with the company, Graeme designed more than 25 linear integrated circuits, received 8 patents, and developed more than 300 applications for operational amplifiers. The same year another engineer, Greg Waterfall, received the “Test Engineer of the Year” award from Test & Measurement World. Burr-Brown anticipated more than $220 million in lifetime sales from products that will use the test method Waterfall developed. The importance of Burr-Brown’s talented engineers was underscored when three engineers left in 1984 to start their own company. As a result, Jim Burns, then president and chairman of the board, set up a corporate development program to help “intrapreneurs” who developed new ideas within the company.

By the late 1990s Burr-Brown made more than 1,500 micro-electronic components and had more than 25,000 buyers around the world. Among its better known customers were AT&T, Canon, General Electric, Hewlett-Packard, Hughes Network Systems, Nokia, Northern Telecom, Sony, and Toshiba. With Syrus Madavi as the chief executive officer and John Carter as the chief financial officer, Burr-Brown saw cutting costs and microman-aging the details of the company as urgent for its continued growth and success. This management team was also committed to continuing the company’s tradition of finding niches in a changing marketplace. For example, Burr-Brown, which was producing chips for Sony camcorders, hoped that the introduction of digital versatile disks (DVDs) would soon provide a major market for Burr-Brown’s microelectronic components.