Competition Spurs New Strategies

Electronics companies are ramping up IT sophistication with emerging technologies such as grid and virtualization.
InformationWeek 500 - ElectronicsAmid the withering competition of the electronics industry, IT executives have lived with one overriding reality over the past few years: Increase efficiency and capabilities while maintaining or reducing costs and staff. The answer for the leaders is coming not from scaling back on IT ambition but from ramping up on their sophistication. For Micron Technology Inc., the answer is coming in part from emerging technologies such as grid computing. Over the past year, the manufacturer of memory chips for computer systems has created 12 resource pools with a total of about 10,000 processors at eight sites, which it manages using the University of Wisconsin's Condor software. The grid computing pools let Micron significantly reduce the time needed to complete a number of critical tasks. For example, the company uses image sensors to test the hundreds of chips that are manufactured on a single silicon wafer. Completing the image testing on a lot of wafers using traditional computing resources could take as long as 34 days. With a grid system, the task can be completed in 11 hours.


Average portion of 2005 revenue spent on IT

Companies spending more on IT this year than last

Buying directly from foreign suppliers

Centralizing control of IT operations in past 12 months

Bringing outsourced functions in-house in past 12 months

Delivering those kind of results under the pressures of the past few years has given IT organizations within many electronics companies new levels of credibility. A new IT initiative gets a "little more benefit of the doubt," says Ed Mahoney, VP of information systems at Micron. "These difficult times have allowed us essentially to evolve IT from an order-taker status to a trusted partner."

At National Semiconductor Corp., a virtualization effort over the past year has enabled the company to significantly reduce the size of its Windows and Linux server farm. When many of the 110 servers in National Semiconductor's data center came up for lease renewal in the past year, the company looked to move the ones that were running a single application into virtualized servers, handling six or more applications. As a result, National Semiconductor has been able to cut down its servers to 50 over the past year. Bob Neuberger, infrastructure manager for servers, storage, and databases for the company, says he'll be able to get down to 30 over the next year.

For Cadence Design Systems Inc., the past year has seen a significant effort to improve security for customers using Cadence's services for projects such as semiconductor design. The company has hired an executive to be in charge of improving the security of IT systems throughout the company, and it has installed software to limit users' ability to access root-level passwords. The company also is experimenting with radio-frequency identification technology and biometrics-enabled access cards.

"Security is one of the three major initiatives within the company, along with customer satisfaction and profitability," says Vernon Clemons, director of IT at Cadence. "Many organizations are worried about things like Sarbanes-Oxley, but our view is security has to be a high concern throughout the organization to demonstrate sensitivity to customer concerns."

The competitive environment for electronics companies isn't likely to ease up soon. But neither are their IT teams.


Hardware purchases

IT services or outsourcing

Research and development



Salaries and benefits


Everything else
33% 15% 16%

Data: InformationWeek Research

Illustration By Paul Watson

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* Agere Systems Inc.
  American Power Conversion Corp.
  Applied Materials Inc.
* Cadence Design Systems Inc.
  Fairchild Semiconductor International Inc.
  Freescale Semiconductor Inc.
  International Rectifier Corp.
  Lexmark International Inc.
  Marvell Semiconductors Inc.
  Micron Technology Inc.
* National Semiconductor Corp.
  Philips Electronics NA Corp.
  Sony Electronics Inc.
  Texas Instruments Inc.
  Vishay Intertechnology Inc.

* denotes a top 100 company

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