Silanna Semiconductor has pledged to freeze prices of its analog to digital converters (ADCs) for two years on receipt of volume production orders from customers.
The aggressive move sees Silanna take on the behemoths of the ADC market whose prices have risen in the past few months.
Silanna’s Global Vice President of Sales and Operations Patrick Moore (pictured) is emphatic: “We decided to hold our pricing static for two years from production order. And if we’re going to be in the business of saying we don’t believe that price increases are justified, and everybody’s taking advantage of the market, then we should be willing to step up and freeze our prices during this time of price increase. So we’re doing just that.
“We know our customers are anywhere between 500 pieces a year to 50,000 pieces a year. And the price lock guarantee that we have is for any of those customers. So what we’re telling customers is you know, two years from your first production order.”
The price freeze covers all of Silanna’s data converter devices.
“We quote the price to the customer, they make their production order, and that price is locked for 24 months,” says Moore.
“We know what our business model is. We’ve built our business model to last in perpetuity, he explains. “Now, certainly, if the entire market fell apart and China invaded Taiwan and things like that broke, everything’s off the table, right? But at this moment in time, with our relationships with our fab partners and our assembly and test partners, we know where prices are going with them. We know the direction that our wafer prices are going. And financially, we’ve modelled this out for the long term. We’re in a fine position to make the margin targets that we need to stay in business and support the customer base.
“Our relationships with our fab partners are direct, TSMC gives us a vanilla 40 nanometre unconstrained mode. We have access to all the wafers we need. We’re sitting on a tremendous amount of wafer bank. And because these are configurable devices, we turn them into the end product at back-end assembly and test. So it’s like a six-week production lead time as well, and that’s a commercial advantage,” Moore emphasises.
“We know what the cost structures are, and we have a commercial advantage from a unit price perspective, significant even before all of this madness,” Moore adds. “We modelled our business based upon that from the beginning. So our ability to hold these prices for two years, five years, however long we want, we’ve already modelled in and there’s nobody that’s going to be knocking on our door going, pay up. You got, now you have 11 months, now you have 10 months, now you have nine months, pay up, pay up. It’s not going to work like that. So that’s why we believe we’re in a very, very good position.”
Moore reports a positive response from Silanna’s distribution partners. “We have a focused global footprint,” explains Moore. “We have DigiKey and Mouser globally as e-commerce partners. In the States, we’re Avnet only. In EMEA, we’re with Astute, Anglia, and Sematron. And in APAC, we’ve got a handful of regional distributors there too. You know, they’re still looking for growth.”
Moore believes distributors will be looking for alternatives to devices hit by recent price increases.
“Any opportunity that they have to offer something, you know, novel or disruptive, they’re excited about, especially in Europe, we’ve had folks talking about this.”
The company’s Plural range which, says the company, redefines data converter technology is the enabler behind the price freeze. It allows Silanna to create multiple, pre-configured SKUs from a proprietary chip design. Instead of hundreds of single-purpose ADCs, the Plural platform’s configurability enables dramatic increases in production scale to lower prices, eliminate capacity constraints and prevent end of life issues versus legacy ADCs.
Says Moore: “We’ve created a technology that changes the game, and we want to create a commercial model that changes the game.”
