Based in San Jose California, Techwell, Inc. (TWLL) is a fabless company focused on designing mixed signal semiconductors for multiple video applications. Analog semiconductors condition and regulate real world information such as light, temperature, speed, pressure, power and electrical currents. Digital logic semiconductors process information in only two states. Mixed-signal semiconductors combine both analog and digital technology into a single device. Typically, an analog sensor samples real world information, and then converts the input into an electronic analog signal, which is converted into a digital format for further digital processing. The analog and mixed-signal markets tend to be more varied and specialized, with customized products that have longer life cycles than those in the digital industry segment. The company's core competency lies in the reception of analog video information and its conversion, processing, transport, storage and display in digital format. Although a relatively small player in the space, Techwell has built a niche for itself in the consumer, security/surveillance and automotive markets.
The company's general-purpose products consist of its video decoder family. These products decode analog TV broadcast signals under the NTSC, PAL, SECAM, S-Video and SCART specifications, as well as signals in other unspecified formats into a standard digital format for further processing. The company's proprietary architecture enables two-dimension (2D) and three-dimension (3D) comb filtering, color demodulating and sync processing. Comb filtering improves color purity and reduces discolorations in fine picture detail. The typical broadcast signal uses luminance (a black and white picture in full detail) and chrominance (coloration in less detail), since the limited bandwidth does not allow RGB sub-signals. The comb filter accepts composite video (with both the above-mentioned picture components and produces two separate signals, one carrying the brightness information and the other the color information. Color demodulation helps to process the color information. Sync processing helps to pick up weak and off-specification signals. End applications for the company's video decoders include advanced TVs, multifunction LCD monitors, DVD recorders, camcorders, security/surveillance systems and in-car displays. Video decoders comprised 33% of 2006 sales, up 12.6% from 2005 levels.
Application specific products include security/surveillance and LCD displays. Techwell's security/surveillance ICs pick up analog signals from multiple security/surveillance cameras and convert them to standard digital format. The company used to integrate a multiplexer into this chip, which helped process the video information. Last year, it introduced a couple of products, each with four video decoders and a system controller on a single device. It also developed a MJPEG codec for storage and playback of video from a HDD and transportation of video over the Internet. End applications for security/surveillance products include embedded DVRs, PC-based DVRs, networked video recorders (NVRs) and multiplexers. The segment generated 52% of 2006 sales, up 100.6% from 2005 levels. The company's LCD display products integrate video decoders, deinterlacers and scalers that facilitate the display of analog TV broadcast, popular analog video, high definition video and PC graphics signals on LCD displays. The company has started including a timing controller on some of its newer products. In 2006, the product line was expanded to include a product for the auto market. This segment generated 13% of 2006 sales, up 38.4% from 2005.
The other products segment includes contract development projects, early generation mixed signal semiconductors for digital video applications, and PCI video decoder products. This segment generated less than 2% of total sales in 2006, and dropped -16.2% from 2005 levels.
Manufacturing is outsourced to Taiwan Semiconductor Manufacturing Company (TSMC), and most of the testing is done at the Taiwanese subcontractor, Advanced Semiconductor Engineering (ASE). While the company tries to sell most products through distributors, it also sells some directly to OEMs and ODMs. The three largest customers in 2006 were Lacewood, Regulus and Gentech, which brought in 15%, 12% and 10% of total sales, respectively. Techwell sells its products through a direct sales force, applications engineering staff, a network of domestic and international independent distributors and independent sales representatives. The principal competitors for Techwell's products are Philips Electronics, Micronas Semiconductor and Texas Instruments.
Techwell went public in the third quarter of 2006.