Texas Instruments Targets Medical Devices
May 15th, 2007 | Published in Company Profiles
In this interview
in Business Week of TI CEO Richard Templeton talks about future
business opportunities for his company. About 40% of TI's sales come
from analog chips rather than the fancy new 45 nanometer DSPs (digital
signal processors), microprocessors and other digital circuits.
Templeton talks about innovation, Apple and the personal computer
industry (as an example of an industry with almost zero innovation).
people invest in research and development, who innovate and grow. And I
put that up there in contrast with the PC industry. PC companies invest
what amount of their revenue in R&D?
The fact is, if it's a point or a point and a half, that's very little.
And so when people sit back and ask why there isn't anything new, it
ought to be an obvious answer. The PC companies aren't investing. When
I say I think it's wonderful that there are companies like Apple (AAPL)
investing in R&D, improving the user interface, new features, [and]
companies like Nokia, Ericsson, Motorola all working on R&D, that's
all good stuff because when those people are doing that, it's going to
lead to new ideas and growth. And the last time I checked, chip
companies can't grow if the people they sell to are not growing
accordingly.
While
established medical device vendors spend a lot more than 1% or 1.5% of
revenues on R&D, the level of innovation seems to be on par with
the PC industry (more on that later). When asked what industry TI
should focus on in the future, Templeton offered this:
an even more important opportunity than before. There's a lot of growth
potential that we can still find. And it doesn't make the front page of
an annual report, and it's not this big single killer application. It's
just a very large, very diversified, very good opportunity. But we're
beginning to see a lot of emerging and new opportunities in the same
way that semiconductors have revolutionized computing and
communications. Think about the medical industry. It's about 15% of the
GDP in the U.S., but the impact of semiconductors in medicine is near
zero.
Whoa! While health care does make up a major portion of the U.S. GDP, most of that is spent actually delivering health care.
Medical devices used in diagnosis, therapy delivery and surveillance
are a fraction of the almost $2 trillion spent on health care. That
aside, we're still talking about real money. The medical devices that
are part of that $2 trillion is based heavily on the kinds of
components made by TI. After a few examples of medical devices that use
TI components, Templeton outlines their approach to health care.
I'd guess
we have 8 to 10 people from different product areas that are gathered
up into a medical team. Plus, I have a smaller group that I get
together with a few times a year to try to understand where we're
going. We've had those groups at a half-dozen medical schools and
bioengineering schools. We want to get a snapshot about the tough and
gnarly problems they're looking at 5 and 10 years down the road. We're
staying closely connected with a lot of the smaller customers, very
innovative companies, a lot of them not public. Few even make it public
because they get acquired before they get to that point.
Other
than a very few places like Mayo or Partners, I don't see much
innovation coming out of biomedical engineering schools - or medical
schools, for that matter. Most of the new ideas are coming out of the
startups. Anticipating what will be needed in 5 or 10 years is a good
thing, but there are problems right now waiting to be solved. The
biggest challenges revolve around the inherently mobile nature of
health care delivery and include miniaturization, reducing power
consumption, and wireless enablement.
One of the problems
that medical device innovation is low and R&D budgets are high (at
least compared to PC manufacturers) is that current product
architectures are very expensive to develop and have long times to
market. Anything TI could do to package I/O, display support and
connectivity that would lower part counts and reduce engineering time
would be significant.
Someone like TI needs the medical device
industry to really take off - to increase medical device turn-over with
new disruptive products. Templeton said as much in his presentation at
TI's annual stock holders meeting last month:
Longer
term, we see great potential for TI to help revolutionize the health care
market around the world. We believe in the next decade that semiconductor
innovation can dramatically improve the quality of people’s lives
by making health care less expensive, less invasive, and more accessible
to a greater number of people.
The reality is that most of the big players - Philip, GE Healthcare,
Siemens - are content with things as they are. They don't want to do
anything that will put their large installed bases in play. Disruption
will come to the medical device market, and companies like TI can both
hasten the day and greatly benefit from the changes - if they do the
right things now.
Pictured right is TI CEO Richard Templeton.
0 comments ↓
There are no comments yet...Kick things off by filling out the form below.
Leave a Comment