California Eastern Laboratories - on the front line for Renesas but much more
June 21, 2010		Email this page

Interview with Jeremy Dietz, Director, Opto SBU and David Cohen, Director of Marketing

Introduction

California Eastern Laboratories (CEL), established in 1959, is the exclusive sales and marketing partner for Renesas Electronics' (formerly NEC Electronics) Compound Semiconductor Devices Business Division (CSDBD) in North and South America.

The company offers Renesas products including RF discretes, wireless RFICs, power amplifiers and switches, and optical products such as optocouplers, relays, lasers and detectors.

In addition to the Americas, CEL has representatives in India, Israel, South Africa and the UK, sales offices across North America and also works with a network of independent distributors.

CEL holds inventories, sets pricing and provides engineering and applications support, and operates a design centre at its Santa Clara headquarters for the development of ICs and components.

Company history

The California Eastern Laboratories name derives from the company's original role of testing and distributing compound semiconductor devices from suppliers in East Asia to 'high rel' military and aerospace customers.

Initially the company's main supplier was NEC, which subsequently awarded CEL the business of selling its products - specifically microwave compound semiconductors - into the Americas on an exclusive basis.

Prior to 1990 CEL's territory also encompassed Europe where a Renesas unit in Dusseldorf, Germany now distributes fibre optic products, although it is a small operation.

In 1995 another unit within the NEC semiconductor division, offering optocoupler devices, was included in the partnership with CEL, and in 2000 the relationship was again expanded to include products offered by the NEC Fibre Optic Device Division (FODD), which produces optical transmitters and receivers and discrete emitters and detectors.

Although the FODD products are now handled by Wavesplitter in North America, there was at the time a transfer of staff from NEC Electronics America to CEL. According to Jeremy Dietz,

"The current arrangement suits CEL in the convoluted optical devices market, where often a customer is also a competitor, and vice versa. When CEL was offering devices from the FODD unit, potential customers would often have concerns that CEL would feed back sensitive information to NEC's different divisions, and so decline to work with it. It should be emphasised that such an eventuality would not occur as there are procedures to prevent it".

Although Renesas does hold a minority stake in the company, CEL is employee-owned and managed, with approximately 100 staff. This means it is not answerable to venture capital firms though the company does have private shareholders and a board of directors.

In addition to its main sales and marketing role, CEL also offers certain products independent of Renesas.

More recently CEL set up a unit that is not tied to Renesas that develops and offers 802.15.4 / ZigBee wireless ICs and modules worldwide in association with a number of partners.

It was noted that CEL was largely unaffected by the merger earlier in 2010 between NEC Electronics and Renesas that created Renesas Electronics, since the NEC unit that CEL works with (CSDBD) was not significantly affected by the merger.

Renesas business

Commenting on the proportion of CEL's business that is attributable to Renesas, David Cohen said that while this varies over time, it has been and still is by far the largest part,

"It should be emphasised that both sides of CEL's business are key and both are expected to continue to be so. The Renesas part will continue to be the main business, but CEL sees an opportunity in the low power RF / wireless mesh, 802.15.4 ZigBee wireless sector and aims to expand its activities there".

Jeremy Dietz added that Renesas is not in the habit of constantly revamping and expanding its product portfolio, indeed its reputation is based upon offering a range of very high quality components for selected markets and this is one of the key selling points.

The importance of quality and reliability varies according to the market segment; in the case of a 10 cent optocoupler it may seem irrelevant unless the part fails, but with a laser or detector costing up to $1,000 it is a key feature.

Delivering expertise

Even with the Renesas-based business, CEL sees itself as much more than a distributor as it maintains close relationships with both the customer and the supplier and its services extend to engineering support for the customer's development of systems utilising the components it supplies.

Jeremy Dietz observed that from the outside it can be difficult to gauge exactly what CEL offers its customers, although from inside the operation it clearly provides a service that partners cannot get elsewhere. Part of CEL's value, he added, is a deep understanding of how to market products in North America and how to use representatives.

The company also offers valuable resources at a worldwide level based on the fact that global businesses may have projects with numerous design-in and purchasing points. In addition, the fact that the components CEL offers may need to be situated on linecards together with elements such as MCUs, SoCs and ASICs demands particular expertise that many systems suppliers do not possess.

Product development

As CEL is on the front line in the Americas region, it is aware of what customers require and feeds back details to Renesas if requirements cannot be met using an existing product. After further assessments, based on demand in worldwide markets, Renesas may elect to produce a new device and might use CEL to help in that development.

This type of work is product dependent, though in the past CEL has engaged in joint development work on fibre devices, generally for a specific customer.

On the opto-semiconductor, optocoupler and SSR device side, Renesas consults with CEL regarding potential new products, but requires evidence of the value of such a move before taking the decision to engage in development.

With regards to microwave products, Renesas regularly develops new devices for the large customers it supplies in this market and CEL's involvement in such projects is one of its key value-adds for Renesas.

CEL has a design centre in Santa Clara that primarily assists customers with tasks such as board designs and engineering, the level of support provided varying from customer to customer.

Such work does not generally extend to CEL developing its own intellectual property (IP) for the Renesas-based business but in the MeshConnect^TM branded 802.15.4 / ZigBee wireless business, independent of Renesas, there are opportunities for CEL to develop IP as it helps customers bring chips and modules to market.

Target markets and customers

The market CEL addresses varies by type of product. For commodity products such as optocouplers the company works through five global distributors - Mouser, Digi-Key, Nu Horizons, Arrow and Future Electronics.

On the fibre device side, CEL is far more selective, in part due to the limited product range it offers that effectively restricts it to certain market sectors. A further factor is reconciling the quality and reliability of Renesas products with the price a customer is prepared to pay.

In the communications sector Renesas is positioned as a supplier of high quality lasers, in particular avalanche photodiodes. This is the niche the company has long addressed and where it continues to offer some of the best devices available.

If CEL happens to lose an order, often the customer subsequently returns after failing to satisfy its reliability requirements with other suppliers.

Asked about contact with communications systems vendors, Jeremy Dietz said that contact is minimal due to the nature of CEL's product offering, which dictates that it is usually working at the level of the transceiver companies. However, he added that CEL does at times deal with cable TV MSOs and test and measurement companies developing OTDR tools.

Jeremy Dietz noted that it can be difficult dealing with transceiver companies as they struggle to make money and strategic alignments in the segment in the Americas mean there are few opportunities to gain contracts in high volume markets such as data comm,

"In this market CEL will try to identify the suppliers' end-customer to gain a better idea of the potential size of the market. This is not easy as, inevitably, the transceiver suppliers give away little information for competitive reasons".

Renesas has recently refocused its product offering for the communications market in areas where it believes it can compete and be profitable. Following this review, current target applications are 10 Gbit/s and 40 Gbit/s systems, certain small segments of the telecom space, and devices for OTDR products.

Explaining certain complexities in the optical components market, Jeremy Dietz cited Finisar as a good example of the difficulties facing suppliers of all sizes.

As a very large supplier of a broad and diverse product range following the acquisitions of numerous companies, Finisar finds itself in both a stronger and a weaker position with customers, Mr. Dietz said. On the plus side, it now offers a very wide product range, but on the down side potential customers may avoid dealing with Finisar if they can because it is also a competitor.

Regarding Wavesplitter, which currently handles NEC FODD products, Mr. Dietz said the only situation where the two companies have contact is if CEL were to receive a request for a transceiver-level product, which would be passed on to Wavesplitter. The reverse would apply if Wavesplitter received an order for components.

ZigBee wireless market

Elaborating further on the unit established to deliver 802.15.4 / ZigBee wireless solutions, primarily under the MeshConnect^TM brand, David Cohen said the company has separate staff to handle this new business, and is assessing, on an ongoing basis, the need to recruit additional staff to address the growing opportunity.

A different approach is taken with respect to this particular market, based on employing a combination of regional, major account and international sales teams.

In Europe and Asia, CEL's sales force, representatives and distributors market only products in the 802.15.4 / ZigBee business.

David Cohen emphasised that the key is understanding this emerging market, its emerging applications, and the customers for the particular product on offer. In the case of ZigBee wireless, this includes learning how to deliver a full solution rather than a discrete device, as the company is accustomed to doing for Renesas.

CEL believes there is a substantial opportunity in the 802.15.4 / ZigBee wireless market worldwide and the company intends to exploit this and expand its activities in this area.

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