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Interview Published February 13, 2004 Derek Cheung, Rockwell Scientific Derek Cheung is President and CEO of Thousand Oaks-based Rockwell Scientific Company (www.rockwellscientific.com), an R&D organization which has been around for more than 40 years, and which has in recent years focused increasingly on commercialization of its technology. I spoke with him to understand what the company is doing, and how its mission has changed from its corporate R&D days. BK: Can you give me some background on the types of research and products that Rockwell Scientific does, and some history behind its spin-off from Rockwell? DC: RSC has a long history of conducting cutting edge research in materials and component technology that enable new systems capabilities. Past examples include high temperature, light weight ceramic composite materials for reusable rockets, high power-efficiency GaAs devices for cell phones, 2-D infrared sensors for space telescope, and high performance LCDs for "glass cockpit" in passenger jets. In recent years we have also build up a world-class research team in information sciences, making major technical contributions in areas such as human-computer interface and system-level prognostics. During the past three years, we have expanded our product business. Our focus are on low to medium volume, highly customized products derived from our R&D programs. Examples are high sensitivity infrared sensors, laser eye protection glasses for pilots, and unique high speed mixed signal integrated circuits for a new generation of digital radar and digital radios. The ability to transition R&D to product is one of RSC's unique competency, and is consistent with our goal of providing the total service to our customers. RSC used to be the corporate R&D lab for Rockwell International Corporation. Since the mid-90's, Rockwell has pursued a strategy to de-comglomerize its businesses. The company has evolved into 6-7 independent companies since that time. During this period we have actually grown in size and has become almost financially independent. When the de-conglomerization process finally completed in 2001, it was clear that the best option for RSC is to set it up as a independent company, and allow it to pursue a business model that will provide sustainable growth as a for profit, high tech company. BK: Where does Rockwell Scientific derive most of its revenue from, now that it is no longer just the R&D arm of a big corporation? DC: RSC derives its revenue from four major sources: government funded R&D, private-sector funded R&D, product sales, and licensing income. The R&D effort provides us the opportunity to continue to generate valuable IP. The value of a sub-set of the IP are realized through RSC IP-embedded product sales and licensing. This is a sustainable process, and holds great promise for future upside. BK: It looks like Rockwell Scientific has done some expansion recently--I see you have a new facility in Camarillo, and I understand you might be looking for more space. What's driving that growth? DC: This expansion is a direct result of moving into product business based on RSC's long tradition of R&D. The facility in Camarillo is custom-designed to manufacture high performance infrared sensors and laser eye protection glasses. RSC has been conducting research for these technologies for many years, and there is a strong demand for such products. This is the time to put the results of the research investment into the hands of our customers, and expand our business at the same time. BK: Has it been difficult transitioning from what essentially was a pure research facility (ala Bell Labs) into an independent entity? DC: It is certainly a challenging task. The difficulty is not in aligning everyone to agree to this new business model, but in realizing the weakness and missing capability gaps in our operation, and take actions to correct them in a timely fashion. We have gone a long way and learned a lot through this process. We have incredible talent in our organization, and we are all willing to learn and improve. As a result, the future for RSC is very bright! BK: Thanks!
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