Even with a little start-stop, the analog job market is coming back

Overall the market for talent is quite good this year and I think we will see it continue for the remainder of the year. The Hot areas right now are Data Conversion, RF, and Power Management. The ultra-wideband (UWB) arena appears to continue to forge ahead despite the lack of agreement on the standards. Were seeing both new and existing clients call in to seek help in luring seasoned analog talent in engineering, marketing, applications engineering and test engineering.

On the Executive front there have been a number of firms that have made changes to their Executive Teams to enhance their ability to achieve their corporate goals. A good number of recruiters we have relationships with have been very busy and the same applies for us. The market has begun a shift back to a candidate-driven market which is causing some companies headaches. A number of companies stretching themselves to make compelling offers. Candidates are demanding financial incentives to change jobs and many active job seekers are again seeing multiple offers. Candidates who resign suddenly from their current employers are seeing increased pressure to reverse their decisions. Employers are routinely making counter-offers involving financial incentives as well as changes in responsibility to attempt to stem the exodus of their talented people. Most candidates can see the pitfalls of accepting counter-offers in the long term and are continuing with their decisions to move on to new and exciting opportunities.

We have noticed that some larger public companies are putting a time frame on current requisitions. A number of them temporarily freeze hiring if the hiring managers do not fill the slots quickly enough. This has become a bit of a challenge for hiring managers as recruitment, courtship and closing with key people is inevitably a time consuming process. Hiring Freezes remain a quick way for profit-stressed companies to lower expenses. Much of this start-stop way be a way for a company to control its spending near the close of the fiscal quarter, to manage the quarterly numbers so as to meet or exceed analyst's expectations.

If that's the case, then the uncertainty these companies demonstrate should dissipate as the first numbers for 2004 continue an upward trend. Q1's numbers appear to be decent and we would expect Q-2 to show industry growth. We should also expect to see increased visibility and a strong Q-3, reminiscent of more typical periods in the semiconductor industry. Layoffs have now dwindled to a trickle and we see this as another very positive trend. It appears that the race to get to market ahead of the competition is on, and the only way to do this is to hire the engineers that develop more new products.

Funding has improved for solid startups as VCs gain confidence in the analog space. In good times, analog is regarded as an outstanding business with great margins. The IPO market has returned as evidenced by the successful launch of Atheros, Sigmatel and recent filings for Oasis. (There are several others who are getting close to filing and should go out this year.) The acquisition market has also returned: Intersil's acquisition of Xicor for $529 million and Vitesse's acquisition of Cicada Semiconductor for $66 million in cash are two recent examples. Keep your ears peeled: we will see several more acquisitions in 2004. The larger companies make acquisitions of smaller ones on the assumption that the deal is accretive, or has a revenue potential with a good ramp. In addition, we expect there will be several smaller cash deals similar to Vitesse's buyout of Cicada.

Our space has made a dramatic turnaround and (barring any macro event) should return to the levels we saw in the early to mid 90s. That said, we would probably agree that the semiconductor industry may never again reach the levels it had in 1999 and early 2000.

Finally, I received numerous queries from the analog community on whether jobs are being transferred overseas to countries like India, and China. We have seen a few companies like TI looking to staff analog and mixed signal designers in their current design centers abroad. But we should not conclude from this that there is a decrease in stateside jobs. Companies will often hire talent wherever they find it. And the U.S. is still home for much of the seasoned talent in the analog field, and I don't see this changing anytime in the foreseeable future!

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