Maxim Integrated Completely happy on its own

Tunç Doluca, Maxim: »Our strategy foresees to grow in the automotive market – but not only there. That’s why we invest a lot of money in R&D in this area. And this is paying off.«
Tunç Doluca, Maxim: »Our strategy foresees to grow in the automotive market – but not only there. That’s why we invest a lot of money in R&D in this area. And this is paying off.«

Maxim is probably one of the companies which is being speculated most frequently as a takeover target by a competitor. Markt&Technik spoke to Tunç Doluca, President and CEO of Maxim, about how he assesses the situation, amongst other topics.

   Markt & Technik: There have been many rumors about who all want to buy Maxim. Does this pose a problem for the company?
Tunç Doluca: Every time such a rumor comes up, I tell my employees: Maxim is big enough itself to be successful. We have a product spectrum which is broad enough and we are present in all major markets. So, there is nothing missing for Maxim to grow on its own.
We put our efforts on good execution and on developing good products that our customers need. That’s what we have been doing for years. And if we stick to this, we will continue to grow.
So, there is nothing that Maxim lacks to be successful. We are 35 years young, which means we are still a young company and we can continue to be successful on our own for a very long time.
But in general, at Maxim we are focused primarily on how we can grow organically or through acquisitions to stay successful.

So, you don’t explicitly look for potential buyers for Maxim?
No. We are growing and rely on the right strategy. There's absolutely no reason to look for a buyer.

But consolidation is part of the semiconductor market, even if the carousel does no longer turn so fast...
Yes, but then all I can say is: If Maxim’s employees focus on making the company valuable, and if they make themselves valuable, then they themselves are also valuable no matter what the circumstance.

Maxim has already taken over many companies. Not all were successful, such as Sensor Dynamics...
We have bought 10+ companies, which were always only smaller ones that did not completely change Maxim. And yes, our track record is mixed.

Why is that?
I believe that taking over small businesses poses a greater risk if the product line acquired will be really successful in the market. For example, when we decided to enter the MEMS sensor market, SensorDynamics was a good buy because it was a really good team with a very good technology. But then the MEMS market had quickly turned into a commodity market, and these are market constraints that you cannot beat and are hard to predict. So, we decided to exit this market.
This also happened with other acquisitions: We wanted to enter a new field, and then realized that things were happening there which were out of our control. This is always a challenge when taking over smaller companies because these companies usually have a narrow product range at their command, typically have few customers, and are only active in one market. I think that the failure rate in taking over small businesses is greater than when acquiring an established big player.
Other takeovers, even if they didn’t turn out to be as successful as expected from a financial point of view, say ROI, were still good because we gained new talented employees or a good technology. For me this includes the Volterra acquisition, for example. We gained access to a talented team with excellent IP and process technology—all important areas to Maxim.
But there are also examples of successful acquisitions in terms of ROI. These include, for instance, the French company Innova Card and Zilog's secure transactions product line.
From all these experiences, I would say that the one thing about acquisitions which is really crucial is to not overpay.

As the share prices of almost all companies are currently very high, Maxim may not be interested in taking over another company currently, or are there technologies or product areas that would be interesting as acquisition candidates?
It's a constant process. Maxim has changed a lot, and we have strengthened some areas and left some—such as MEMS. This means that we are now also looking to see whether there are products that could strengthen our range.