In the world of technology and business, only a few success stories can match the rise of Microchip Technology. From its humble beginnings as a struggling semiconductor company in 1990, Microchip has become a $43 billion behemoth that dominates the global market for microcontrollers and related integrated circuits. Steve Sanghi, one of the longest-serving CEOs in the semiconductor industry, led Microchip through this incredible journey. In his book "Up and to the Right," Sanghi shares his personal and business journey in building Microchip into the technology juggernaut that it is today.
Born in India, Sanghi came to the United States in 1976 to pursue higher education in electrical engineering. After completing his Master's degree, he joined Intel in 1978. At Intel, Sanghi learned the ins and outs of the semiconductor business, working in various roles and rising up the ranks. But he always had the desire to work in a smaller start-up and eventually start his own company. In 1988, he left Intel and joined a small start-up called WaferScale Integration in Fremont, California.
In April 1989, General Instruments decided to spin off its struggling semiconductor division into a private company called Microchip Technology with the help of Venture Capitalists. That year, there was also a proposal to merge WaferScale with Microchip Technology. Sanghi led the due diligence and made an affirmative proposal to merge the two companies at 50/50 ownership of the joint company. But each company’s VCs wanted 65% of the joint company. So, the proposal failed.
In the aftermath of that, there was a significant management turnover at WaferScale including the departure of the CEO. Sanghi stayed for another nine months. He wanted to start a new semiconductor company and had a business plan. As he was raising money for that business plan, some VCs asked him to essentially implement that business plan at Microchip. So, in February of 1990, he joined Microchip technology.
Sanghi's timing couldn't have been worse. The semiconductor industry was in the midst of a downturn, and venture capital was difficult to come by. The company was bleeding money, and Sanghi was on the brink of bankruptcy. But Sanghi refused to give up. He realized that Microchip’s problem was not just with its products but its entire business approach. Microchip was trying to compete on price, which was a losing game in the field of programmable Read only Memory (EPROMs). Sanghi decided to change Microchip’s strategy. He focused on combining a RISC Microcontroller architecture and its programmable Memory technology to deliver Field Programmable Microcontrollers to its customers in volume production. He created an in-house system called the Aggregate System, which helped Microchip improve its quality, reduce costs, and increase efficiency. The system was so effective that it became the foundation of Microchip's success.
In 1993, Microchip went public with an initial market capitalization of $85 million. Microchip stock went up six times by the end of 1993. Sanghi was determined to make Microchip succeed, and he worked tirelessly to implement the Aggregate System and other business processes that would drive the company's growth. It wasn't easy. The microchip was competing against much larger and better-funded rivals, and it had to innovate and differentiate itself to survive continually. But Sanghi and his team were up to the challenge.
One of the keys to Microchip's success was its focus on field programmable microcontrollers. Microchip’s competitors dominated the market for ROM based microcontrollers. Microchip offered field programmability to its customers, which became a big hit. Sanghi describes in his book how it helped Microchip blow open a market and achieve enormous growth. Sanghi was also an aggressive acquirer, buying over 20 companies in the last 13 years, all of which have been successfully integrated into Microchip's business.
Furthermore, the book covers the transformation of Microchip from nothing to a $43 billion market capitalization. Microchip's success was built on an in-house, consciously designed Aggregate System that dramatically accelerated the company's rate of improvement. The book also delves into Microchip's strategic planning process and its series of acquisitions that scaled the company 10X. Sanghi shares valuable insights on how to build and maintain a successful enterprise, making the book a must-read for all business people in the technology industry and beyond.
Sanghi's personal journey is just as inspiring as Microchip's story. The book details Sanghi's upbringing in small towns of Northern India, his immigration to the United States 47 years ago, and his successful career in technology. After a ten-year career at Intel Corporation, and a brief stint at WaferScale Integration, Sanghi spent the last 32 years of his life building Microchip Technology into a semiconductor juggernaut. Through his personal anecdotes, Sanghi provides invaluable advice on perseverance, hard work, and leadership.
The book's title, "Up and to the Right," refers to the charts that Sanghi uses throughout the book to illustrate the progress of Microchip through various phases. All these charts have a common look. They are "Up and to the Right." Microchip is currently achieving record financial results in every category, and Sanghi is confident that they have built a juggernaut that will continue to succeed.
In conclusion, "Up and to the Right" is a remarkable business book that offers invaluable lessons on building and maintaining a successful enterprise. Sanghi's personal and business journey is inspiring, and his insights on leadership, strategy, and management are highly relevant to all business people, regardless of their industry. The book is a must-read for anyone interested in the technology industry and for students aspiring to be successful business people someday. Steve Sanghi's legacy as the CEO of Microchip Technology is nothing short of extraordinary, and "Up and to the Right" is a testament to his incredible achievements.