Zilog To Increase Investment In China

SHANGHAI, China — Pegging much of its future growth on Asia, Zilog Inc. intends to increase investment in its Shanghai design center so that it can be more responsive to its increasing number of customers here.

"For a number of the companies we work with, their manufacturing is shifting to Asia, so the closer we are to where that manufacturing takes place, the better it is," said Zilog interim CEO Robin Abrams.

About two-thirds of the MCU maker's revenue comes from consumer electronics and white goods, making Asia, and particularly China, a core component of its growth strategy.

Consumer electronics is one of China's most active chip design areas. Chinese consumers are also among the largest retail consumers of the types of cost-sensitive products that Zilog targets, such as remote controls, and a host of Chinese manufacturers are would-be users of Zilog's motor control MCUs.

Zilog also has a software development center in Bangalore, India, and test facilities in Manila, Philippines. With about 40 percent of its design wins in Asia, Abrams visited Asia to stump for the company's recently released ZNEO Z16F family of flash microcontrollers, Zilog's first foray into 16-bit devices. Later this year, it will release a 32-bit MCU targeted at secure transactions, for instance, in point of sale terminals.

The new products mark a departure from Zilog's long-time focus on 8-bit MCUs, which have been popular in China and Taiwan. It may help the company beef up margins and achieve profitability after a years-long turnaround effort.

For the fiscal 2006 year ended March, sales were $78.8 million, down from $89.8 million the previous fiscal year. Its net loss was $16.9 million, compared to a loss of $25.1 million in fiscal 2005.

Abrams said Zilog is still on track to hire a new CEO, and she hopes to see someone in the position by the end of January.