Growth in high performance linear (where Maxim plays) is out pacing the rest of the analogue market (with a CAGR of 18% between now and 2008, according to Databeans). Which application areas do you see as being particularly compelling?Jack Gifford.:Well Maxim has a total of 83 different product lines, across the whole range of analogue sectors, and we announce 600 to 700 new devices every year. We don't have this approach of finding a 'killer app', there are two many flaws in that way of thinking, we are just looking to get as many of our parts in to as many designs as possible. Not one of the 17 business units on which the company is built creates more that 10% of the revenue. This way we unsure that we are not dependent on one particular market. There isn't really a piece of electronic equipment that doesn't need to have some sort of analogue functionality in it. The leading edge will always require higher levels of speed and accuracy, and this is exactly where we position ourselves. The company has released quite a large portfolio of Power-over-Ethernet products, what are for expectation for this application area, how big could it get?J G.:We introduced a series of Power-over-Ethernet products very early on, but I wouldn't really say we really got the jump on anybody. By nature, one of our strengths is in low power devices, and that gives us a lot of traction in this particular sector. The advantages of it are clear enough; it saves on connection, and hardware, so it will see a reasonably widespread implementation. However it won't be valuable everywhere, it will still be selective.As we know the analogue market is very fragmented, but if Maxim is to maintain its current strategy of searching out the high performance (and thus high margin) applications it has to play in nearly all its sectors. A lot of companies in analogue have st??4?4?A?rength in a particular sector, and devote the vast majority of their R&D to it. Maxim on the other hand has to be a 'jack of all trades' in order to compete with the data conversion products of Analog Devices, the voltage controllers of National Semiconductor or Intersil, the amplifiers of Texas Instruments, and so on, isn't that a tough proposition?J G.:I'm very proud of the fact that with these 83 product lines that I already mentioned, we can say that we occupy either the first or second place in the markets they serve. This goes all the way from analogue gate through to multiplexers. When it comes to matching the development spend of the specialists in a particular field, there in lies the key - we don't. They just aren't as efficient in their investment as we are. We hit certain areas and aim to do the best job there, to cherry pick, rather than try to cover everything. The number that strikes me is a four or five years back, Analog Devices had $1Billion revenue from data converters, and we had a hundred thousand. Today they still generate $1Billion from these lines (maybe a little more than previously), but we now have almost matched this. We are a bit like a hardware store. We have many different shelves, with a wide portfolio of products, and each of these product groups is looking to be the leader in its sector. They don't have to get involved in the overall strategy of the company, they can focus on making sure that they beat the competition in a particular field. It's a bit like having 83 start-ups.But do you have to plough more money back into R&D, than other companies of your size would have to, in order to be able spread yourself across so many sectors? What percentage of your revenue do you put aside for these undertakings?J G.:We put a lot into R&D, but it is not just limited to how much money we spend. You need to be able to att??4?A?ract the engineering staff too. To be a good analogue engineer requires many years of experience. They tend to have a 'journeyman' mentality, so it is more a question of being armed with good engineering staff than just throwing money at things.You have gone on the record saying that acquisitions only tend to dilute the intellectual and financial value of a company, and that anything worth having will be overpriced, while anything affordable will be next to worthless. But given your success assimilating Dallas Semiconductor into the fold, are you tempted to try the same trick again?J G.:The short answer - no! I really wouldn't want to but myself or the company through that again. It took a lot of hard work to make the acquisition a success, and this was more down to our pure tenacity than anything else. Dallas took about 10% of our revenue to buy, and now it is actually contributing 20% towards our revenue, so it has clearly been a good move for us. Nevertheless I will return to my old axiom - everything that you can afford to get isn't worth it, and anything that has real value is going to be hugely overpriced. Mediocrity buys mediocrity. But if we paid slightly over the odds for Dallas, that nothing compared to what Texas Instruments paid for Burr Brown. I don't think they can ever hope to gain back what they have had to invest into it.Maxim has a very clearly defined working philosophy, and let's notbe coy about it that is the 'Gifford philosophy'. How difficultwas it to get Dallas to take on your values and your wayofworking?J G.:Well we have put in place the 'Maxim Principles' which are basically a set of thirteen pieces of home-spun wisdom, that form the foundation of what we are trying to acheive at Maxim. They are just plain old common sense really, the thi??4?A?ngs I picked up over the years, learning things the hard way, through making mistakes. But it wasn't that hard to implement these at Dallas. What really impressed me with the company's staff was the integrity of the people. They had belief in our ideas, and had great regard for our way of working. We managed to quickly organise the company into six business units, just like those that already existed at Maxim. From the acquisition we have gained a microcontroller capability, as well as a chip bumping fab which gives us better inroads into newer generation packaging technologies like flip-chip. Normally in these situations, the good guys don't stay, and this is another factor that often demeans the value of any acquisition. But we were able to retain the talent at Dallas, because they shared our belief in the company, and wanted to make it work.

I think that it would...

Again, not trying to massage your ego, but with Maxim being so dependent on the drive and character of one man, won't it firstly be hard for the company to keep its momentum, when you do eventually retire? And secondly won't it be equally tough for you to let go?J G.:I think that it would be very hard for me to not be involved in the company. I grew up in the ghetto, and as a result I guess I follow a pretty plebeian lifestyle. I don't really have expensive tastes, I play a little ball, spend time with my family, and run Maxim. The company plays a big part in my life, and I think it would be difficult for me not to be involved in it, but that doesn't mean that I won't be able take a step back from it eventually. Although it may seem so to the outside world, it's not me on my own who is driving the company forward. Sometimes I think I'm given far too much credit for how the company is run today. I installed the principles on which it is based, but it's much more of a team effort than people think. The business units effectively run themselves, they don't need micromanagement to perform well. If I do want to take things a bit easier in the future, there are at least three guys in the company who would be more than capable of looking after things. Over the last few years engineers have been happy just to keep their jobs. Now that the upturn is starting to gain some strength, we'll have the familiar problem of companies having to fight to keep their employees from going elsewhere, as well as enticing the best college graduates. How does Maxim ensure that it is seen as an attractive option?J G.:The underlying principle of this industry since it very inception, and the reason why it has continued to be so innovative, is that companies have allowed the workers to participate in ownership. Maxim has always been true to this and as a result its share value h has gone up 12000% since it went public, and investors have seen a compound growth of about 40% every year. We have also kept a high continuity of people, with a very low staff turn-over. To put it simply success breeds success. People like to be in an environment where they can achieve something, and if you give them the opportunity to show what they can do they will stay satisfied. 65% of Maxim's employees were not born in America, showing that we can draw talent to the company wherever it is to be found.Investment in tech companies is still quite weak, with people getting their fingers burnt when the bubble burst, wrangling aboutshare options, and chief executives getting caught with their hands in the till. Despite the upturn in the market being well under way, potential investors in electronics are not queuing up. How long will it take for this to change and doesn't the weak state ofthe NASDAQ put you under pressure as to what investors will be wiling to accept in order for you to keep the cream of your engineering talent.J G.:Well you have two things happening. So much money was lost when the bubble burst that investors have become a little 'gun shy'. They have lost confidence in the investment banks, since a lot of companies that should have never been brought in to existence got their backing. The other is the situation that had arisen during the election. Kerry's financial policy worried a lot of investors. Now that all that is resolved I think we will see signs of improvement. I have to say I am not impressed with the government's actions on share options. This is a punitive measure to reprimand those who re-valued options. But as well as punishing the crooks, companies like Maxim, who played by the rules, are getting hurt too. Regardless of this we aren't going to waiver from the way the company is run. A lot of other companies will be intimidated by current circumstances, but we feel our investors will see the value in giving strong incentives to the workforce. Whereas many other companies have only given 2% of outstanding shares away to their staff, we have always gone for 4-6%. Only last month our shareholders approved that 4% go to the employees this year despite the current pressures. Vital Statistics: Maxim Integrated ProductsHeadquarters: Sunnyvale, CAEstablished: 1983Employees: 6000 (approx)Business: Analogue & Mixed Signal DevicesRevenue: $1.44 Billion (FY2004)