Allegro looks to top $1bn
Allegro Microsystems is approaching the billion dollar milestone for its magnetic sensing and power technologies. Stefan Steyerl, recently appointed VP sales for EMEA talks to Nick Flaherty.
“We need to adapt to the market conditions, to the megatrends and adapt our organisation in the right way,” says Steyerl. The company has a mix of foundry partners, which helped smooth out delivery in the chip shortage, particularly for its automotive customers. It includes most of the Tier One automotive suppliers in its 10,000 customers, but no one customer is more than 10% of the business says Steyerl.
Magnetic sensing is 61% of the business with power at 39%. “68% comes from auto and 20% from industrial which really links into green energy, cloud infrastructure and automation
The year to April 2023 saw $974m revenue, up 27% on the previous year, with $1bn clearly in its sights. “We have ambitious targets to double revenue,” he said. “The share in Europe is similar to the global segments. Automotive is perhaps even a little bit more, above 70% and industrial is a little larger.”
Automotive
“We expect growth globally above 10% in 2023 and from a European perspective with an automotive perspective and the transformation to ADAS and electrification I expect our growth in designs will be beyond the global growth. I don’t think we’ll get to last year’s growth figures as we see a softening in the market overall in calendar year 2023 and we see in the supply chain increased levels of inventory. But we could not ship in 2022 the complete demand that our customers wanted.”
“If you look at design ins then the share of Europe is roughly 23% of the overall business and that’s a good position but we need to grow that share. Based on our feedback specifically in automotive they are expecting an upside in calendar year 2024,” he said.
The company works with TSMC and UMC, while assembly is a mix of internal and external capacity in a 50/50 split and there is 100% internal testing in the Philippines.
“Since the crisis our executive team has done a great job to expand our capacity. If you go back to Mach 22 and fast forward to July 23 we have roughly doubled our wafer capacity with different partners. Costs have increased by quite a large level at the foundries and as part of that to keep our margins up we also increased our prices so the ASP holds and our margins hold.
The customers are changing, says Steyerl, who joined Allegro last year from Analog Devices.
“Customers are a combination of historic engagements with tier one suppliers with engagements and with Tier twos, but over the last years there has been a strategy to engage with OEMs directly,” he said. “It’s a transformation for them and they need to figure out what the systems look like and more and more they are taking ownership of critical technologies as a tier one.”
As an example he points to OEMs using contract manufacturers such as Flex in Europe rather than Tier One suppliers for traction inverters and this makes the supply chain more complex.
Disruptive times
“If you go back ten years or more from a semiconductor perspective the selling was a linear approach, the products ramped with Tier One suppliers without much engagement with the car makers. Now it has changed, it is an ecosystem, you need to look into the ecosystem of the car maker and there is a complex level of engagement with three or four partners. It depends on the components and the systems.
“We are in very disruptive times globally speaking and in automotive with electrification as new players enter the market with Chinese car makers and contract manufacturers. There are a lot of changes and things are not working in the same way they did 15 years ago. European car makers have been late into EVs and the share today is not where it is for ICE.”
“We understand that China has a higher volume which is why China is very important but for innovation the number one region is EMEA,” he said.
The local product support and design is key for those OEMs.
“We have technical centres in Germany and France that go beyond field applications where we have people that can really go into the specific products and systems. The other beauty in Europe is we have the large design centres in Milan, in Prague, just outside Nice and in Scotland and a small centre in Cork, Ireland that we have just opened so there is a heavy engineering capability of a few hundred people across Europe.”
“So we are continuously expanding the sales team as well as continuously expanding our design teams. The team at Nice was an acquisition for the isolated gate driver technology and we will expand Prague and Cork,” he said.
