Gains and Pains
Some companies clean up at the expense of others.
Alan R. Earls, Contributing Editor -- Test & Measurement World, 7/1/2006
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For now, though, the company says things look pretty rosy. About two-thirds of Agilent's revenue was generated from outside of the US in fiscal 2005. And with 20,000 employees, the company has managed to give itself a global presence. Of the company's total net revenue of $5.1 billion, $3.3 billion was generated by the Electronic Measurement Group, $500 million came from the Semiconductor Group (which was sold early this year, and is now called Avago Technologies), and another $1.4 billion came from the Bioanalytical Measurement Group.
"Agilent is definitely the number one in T&M, but Advantest has come up fast, especially in the past two or three years," said Kiran Unni, a program manager at Frost & Sullivan, a research and management firm.
Unni said the key for Advantest has been moving away from just memory test, where it has traditionally been very strong—with something like 60% of the market—and into SOC and semiconductor testing. "The margins are small but [the company has] managed to pass Teradyne in market share and revenue," she noted.
"Advantest has long been the industry leader in memory test," said R. Keith Lee, president and CEO of the company's Advantest America division. "Now, through the success of the T2000 open-architecture SOC test platform, we are also recognized as a leader in the SOC test market."
Indeed, Lee said cost-effective test and lowering the overall cost of system ownership is important to customers and is "the driver of Advantest's commitment to providing innovative test and handling solutions." In particular, Lee cited the success of the T2000, which is an ATE platform based on the OpenStar specifications introduced in 2004 by the Semiconductor Test Consortium (STC). Lee said the future of the T2000 looks very positive. "We have good momentum and good interest from potential customers."
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Lee also cited another aspect of Advantest that he said has contributed to the company's growth. "Advantest differs from most ATE companies because we view manufacturing as a strategic core competency and so we keep our manufacturing in-house," he said. In turn, he added, "Our manufacturing capabilities allow us to deliver high-quality systems that lead the industry in accuracy and reliability."
Looking at the future of the test-and-measurement industry, Lee said, "We are at the cusp of a mammoth business model change, caught between contemporary IC demands that can be summarized as 'more, faster, cheaper, better' and a traditional ATE business model that is no longer viable." In other words, said Lee, "the traditional ATE model fails in today's consumer-driven SOC device environment." Lee said the key for the industry, therefore, is to adopt an open-architecture approach. "Advantest believes that a single platform, open architecture is the future, and that shapes our perspective on the industry," he said.
Unni at Frost & Sullivan said beyond the huge success of Agilent and Advantest, 2005 also saw continued strength for Tektronix, in third place among publicly traded test-and-measurement companies, though the company's ability to make a real impact beyond its traditional strength in oscilloscopes remains elusive. Beyond that, Unni said, everyone should watch for bio/pharm instrumentation to emerge as a continued source of growth. "Perkin-Elmer, Thermo Electron, and Waters all made strong moves toward pharma and life sciences last year," she added.
