IDT: Target Market & Strategy

IDT was founded in 1980 with a focus on SRAM and commodity-like logic products. The company produced everything in-house and adopted a vertical business model; however, it was far from profitable, and the company eventually decided to focus on the communications/networking market (packet processing etc.) and started using foundries for some products by adopting a fab-lite business model.

In the last few years, IDT has grown into more mixed-signal markets, including but not limited to PC Audio (by acquiring Sigmatel) and PCI Express switches. IDT is nicely profitable right now on a non-GAAP basis, and sports a market capitalization over $2B. So now, their challenge obviously is to expand into other markets to keep growing now, and that's why they have decided to enter the DisplayPort market next year.

But what makes IDT confident they can be successful and profitable in this new market, when even Genesis Microchip is currently losing money? Three reasons, really: synergies, synergies and synergies.

IDT has experience in many other markets that require some of the same expertise as DisplayPort receivers. That means lower R&D costs, as they don't have to build a company from scratch for this and can reuse their existing IP instead.

They also believe their IP will likely give them some advantages over their competitors; for example, Chad Taggard didn't expect everyone else to have the same flexibility as they do with programmable clocks, which might force them to have multiple chips (one for 1.6GHz DisplayPort, and one for 2.7GHz). IDT is also optimistic about their EMI and crosstalk levels, as well as power consumption. All of this might give them a real advantage over Genesis in the notebook market, for instance.

Another claimed advantage is IDT's experience in creating custom solutions for customers, potentially more tailored to their specific needs. And finally, after notebooks and PC LCDs, IDT also plans to compete in the LCD TV market (against LVDS as an internal bus, not HDMI). The primary reason why that will come later is the industry cycles are different (and longer) in the CE industry. DisplayPort also has some potential in handhelds, but that will likely come even later and isn't an immediate target for IDT.

As for manufacturing, IDT plans to use their in-house fab in Oregon for this range of products, as it is analogue-centric. The company wouldn't comment on the exact process node they were planning to use, but the DisplayPort specification is made with older processes (including 350nm) in mind on the receiver side, so it might not make much sense to use something significantly more advanced.