A tremendous opportunity faces the pioneers in the Power Conversion Process. We are truly in a pioneering stage. And the opportunity that faces us is based on addressing the drive of all humanity to raise our standard of living. This all crystallized for me 22 years ago when I was a graduate student. A professor of mine took off his glasses and asked me the simple question, "What do you think makes these glasses cost what they cost?" Well, I zigged and zagged around an explanation of the law of supply and demand. He said, "That's all bull. What makes these glasses cost what they cost is the amount of energy it took to refine the glass, to refine the metal, and as a matter of fact, the energy it took to make the gasoline that went into the tanks of the cars that the workers drove to the factory. The energy it took to transport the glasses, the energy it took to heat the store," he said. "The world's standard of living is inversely proportional to that cost of energy. If the cost of the energy goes down, everything becomes more affordable." For me that was a crystallizing moment and the beginning of my career.

Looking back at the Power Conversion Process from an historical perspective, in the beginning there was man and man alone operated in a subsistence mode. His or her muscle provided the sole source of energy in the world. He alone would till the soil to produce the foods that the family needed to live. He alone would build the shelter.

When man learned to domesticate animals, he used their strength to help with his tasks. He made a major improvement in his standard of living. Granted, there were start-up costs, but after the cost of feeding and training and outfitting and housing the animals, the greater productivity created a surplus. In fact, harnessing animal power led to man's ability to concentrate his efforts on specializing endeavors. Some people could be farmers, some could mill the grain that others grew, some were simply involved in transporting the products or selling them. Harnessing animal energy promoted man out of subsistence and ushered in the Age of Commerce, creating a vast new wealth. However, over time, the planet's population grew faster than the food sources and we became a competitor with our own source of energy - the animals. Scarce resources of land and food began to make the cost of animal energy rise, threatening the standard of living. Fortunately, in the intervening years, we learned to harness wind and water, keeping our standard of living increasing through the decades.

The next big breakthrough came in the early 1700s when steam power became commercially available. This development radically changed the way we powered our factories, transported our goods and led the way to what we now call the Industrial Revolution. Factories and cities no longer had to be located next to waterways. But rather, we could select our location based on convenience to labor source or convenience to raw materials, such as wood or steel or coal or whatever it was. And of course, the steam locomotive and the steamboat allowed us to transport our goods from where they were produced to markets all over the world - faster, cheaper and more predictably. And we lived better for it. The result was cheaper goods, better quality and tremendous growth in our food resources. But over time we started depleting our coal mines located next to our factories. We had to dig deeper and deeper into the earth to get the coal out. We logged our forests and had to go to more remote locations to get the wood. In fact, the cost of steam energy was rising. Further improvement in our standard of living demanded a new source of energy. It came in the Petrochemical Era in the 1800s.

Gas Lights illuminated our factories and our homes, creating a longer workday as well as more time for entertainment at home. Certainly transportation was revolutionized with the internal combustion engine, and later by the jet engine. We could get our goods to market faster than ever before, and the entire 20th Century showed an increase in the standard of living as a result of this lower-cost form of energy. However, our oil reserves will be depleted sometime in the future and we're just beginning to understand the cost of cleanup of both our air, water and ground from the residues of the Petrochemical Era. This cost will cause the price of energy to go up over time. Again threatening our prosperity, our growth, and ultimately our standard of living. What's going to bring us out of this? The last major breakthrough in the cost of energy, the electrical source of energy. Vastly cheaper to distribute than wood, coal or oil, electricity quickly took over the lighting of the world and brought low-cost energy to the home. For the first time we had refrigeration. We also had washing machines and vacuum cleaners that increased productivity in the home, thus freeing up half the population to join the work force. In fact, electrical energy over the last seven years has continued to decrease in cost.

Electrical energy ushered in the Information Era. We found that we could use electricity to transmit communications and to process information at a lower cost. Today, however, we're in the early stages of an energy competition for the next millennium between all the prior forms of energy and electricity. What's driving this competition? Of the 65 trillion kilowatt hours of all forms of energy produced each year, only 12 percent is electrical. That 12 percent is the fastest growing source of energy. But since the 1970s, our production of electricity has slowed to less than half the rate of our growth in consumption. That slowing was led by the fact that in the late '70s we went from thinking that our resources were limitless to realizing that we didn't want to fill our canyons with water. We didn't want to put more nuclear power plants in the world. So all of a sudden, our electricity and cost of our standard of living became threatened by our own choice to slow down development. Developing countries had a different agenda. They were just beginning their expansion in the standard of living. In developing nations around the world, such as Africa, India and China, their economic growth is paced by their growth in electrical supply. So how can we continue the decline in the cost of electricity? The standard of living on this whole planet depends on the answer to that question. I believe the solution lies with the pioneers of the process that can save about one-third of our electricity and save in the enormous cost of the world's energy. The answer lies in the Power Conversion Process.

At International Rectifier, we've spent the last 50 years dedicated to improving the conversion of electricity from its crude form to its refined form. This is analogous of what an oil refinery does when it takes crude oil, which isn't a very good source of energy, and converts it to home heating oil, gasoline, jet fuel, etc. The same this is true of electricity from the power plant. It takes crude energy in an inconvenient format and refines it to exactly what the load requires. If that refining or conversion could be done with no waste, at least 30 percent of the world's energy could be saved. International Rectifier is dedicated to this process. We picture it as a four-stage process, with an additional stage for distribution.

The first stage we call the input stage. Crude energy, usually in an AC form, comes into an input stage which roughly rectifies it, what conventional rectifiers and resistors do. You can also use the input stage for power factor correction or for soft starting or to do various protection and filtration functions.

Next comes the control function. Control is like the supervisor; it looks at the load and the input and decides what signals to send to a switch. The switch is the catalyst for the whole operation. Until the development of the modern power MOSFET transistor, we didn't have a switch powerful enough to control this flow of electricity, or fast enough to get it into small enough packages of energy that could be reformatted into exactly that the load wanted. Today, the high speed switch breaks up this electrical energy into tiny packets which are reassembled like a mosaic by the output stage. These four stages now produce energy in a form that is suitable for a motor drive with a different control circuit and different topologies for a ripple-free power supply or even for a fluorescent light. In many applications, one source of energy is used to power many different loads. For that reason, we picture a distribution stage in the Power Conversion Process, which sends the energy to various places. For example, all the places in your car that use electrical energy? That all supplied by the alternator. Or in your computer where all the different applications come from the battery source.

This is how we see the Power Conversion Process working for us and as a competitor. The cost of the power converter is competing against that energy that it saves. After 20 years, 16 percent of all our electronics on this planet are going through power converters. You multiply this by the 12 percent of energy that's electrical and that's two percent! We are the pioneers. We are at the early stage of the efficient use of electricity. As we make power converters more cost-effective, two things will happen, (1) We'll capture a larger fraction of the world's electrons, and (2) electricity will capture a larger percentage of the world's energy. We'll also expand our use of that energy and International Rectifier offers a few examples of what is on the way in the next millennium.

Electric Motion is the sleeping giant of electrical applications. A recent study found that twenty-five percent of all the electricity generated on the planet goes into motion. Fifty percent of the electricity in the United States is consumed by motors. Ninety percent of those are uncontrolled motors with no semiconductors making them painfully inefficient. For example, a refrigerator has a little dc motor that clicks on when the refrigerator is too hot and clicks off when it is too cold. When it's on - it's full on, and when it's off - it doesn't work at all. If you were to replace that motor with an AC variable frequency motor that spins slowly when the refrigerator door is closed and speeds up when it is open, a few things would happen. The size of the compressor would shrink, your food would last longer (variations in temperature determines spoiler grade of your food), and most important you'd reduce your electric bill by $70 a year or about 40 percent (the difference between the energy required to run an AC motor vs. an uncontrolled dc motor to produce the same amount of power).

Twenty-five percent of the world's energy times 90 percent of the applications, times 40 percent savings add up to about nine percent of all the electrons in the world. We wouldn't need to build another power plant for quite a while if we could save that amount of energy. Lighting is the largest application for electricity in the world. In the 1880s, Thomas Edison found a way to use electricity and sold it to the world in the form of the light bulb. That application is the ripest for change since 30 percent of all electricity goes into lighting, and 75 percent of that amount is all waste. Incandescent bulbs burn three times the amount of electricity for the same output as an electronic ballast with a fluorescent bulb. If you were to replace your 60 watt light bulbs with compact fluorescent ballasts, you'd pay about $5 more than you would for all the incandescent bulbs, but you'd see that the fluorescent bulbs last about 10 times longer and you would save about $30 over the life of that bulb. With a 100 watt bulb, you'd save about $70.

In the developing countries like China and India and throughout Africa where the energy budget per person is about 100 watts, energy savings can mean the difference between lighting one bulb and lighting one bulb and running a computer. That's a major difference. If we converted all the incandescent bulbs in the world to compact fluorescent ballasts, within one year we'd be saving 20 percent of all the world's electrons.

One of the most expensive forms of energy is that supplied by a battery. Imagine cruising at an altitude of 30,000 ft. with three hours left to your flight and your lap top computer goes dead. Extending battery life is the ripest market and one of the most profitable for extremely efficient power conversion. As we've gone to higher technology batteries (such as the lithium ion), the output of the battery becomes more variable with the rate of discharge. Therefore, you need more sophisticated power converters to track and carefully and efficiently regulate the energy flow throughout the entire span of the battery's discharge cycle. And as companies like Intel are trying to build more powerful microprocessors that operate at lower voltages, you'll need to regulate from a varying input source to a 1.6 volt output onto your Pentium Pro II portable computer that's consuming 18 amperes and ramps up in 10 microseconds. These are huge challenges and they sell a lot of lap top computers and cell phones. Cell phones that are halving in size and doubling in talk time all because of more efficient conversion of the lithium ion battery to transmit power.

Over the last three years, the average battery-operated system has doubled in battery life for the same power consumption. This expands applications and the use of electricity, making communications cheaper and information cheaper as well.

The automobile is a good example of an application where electricity is directly replacing petrochemicals - one for one. I recently read a study conducted at MIT on electronics in cars. Some phenomenal conclusions were drawn. First of all, the average American car now consumes 800 watts of electricity. By the year 2005, that figure will increase to 2,400 watts. They pointed out in the study that one watt of power consumption in a car with today's alternators is equivalent to three-quarters of a pound of weight in terms of the gas mileage of the car. Those 800 watts are like having four passengers sitting in your car, a tremendous drain on the gas mileage and on the performance of the car. Putting in a more powerful engine will consume more energy still. For this reason, new applications such as smart alternator starters are much more efficient in taking the energy from the engine through a gear into an AC motor, which is also your starter motor. Once the motor starts, it becomes the generator going through a smart power converter, which is approximately 90 percent efficient. When you add up the weight savings, it's a three-mile-per-gallon savings, and the cost is the same in capital. We'll be seeing smart alternator starters in the year 2000; electric power steering (EPS) will be on those cars next year. EPS replaces 15 pounds of hydraulics with a little box and a little motor. It saves two miles per gallon while providing a safer handling car. These are just the applications driving the automotive world and power conversion for the next few years. But somewhere out there in the next century we will have electric cars. I happen to be the proud owner of an electric car and I drive it every day. I must say that after owning an electric car, I realized that future technology is not waiting for someone to invent a better battery. It is already a better car today. I start every day with a full charge and I've never run out. I've never even come close. It's a cleaner car and easier to drive. This is the future of automobiles.

International Rectifier makes power semiconductors. So we look at the market in terms of power semiconductors, which we see as a $100 billion opportunity in the next 50 years. All of that is making the electronic slice of the pie bigger, while petrochemicals are shrinking. How fast the transition to electricity as the fuel of choice is going to happen depends on the Power Conversion people of this industry. At International Rectifier we are very concerned about that and believe that by the end of the year 2000 electricity will represent four percent of all the world's energy. That approaches 30 percent of all the world's electrons. For International Rectifier it means that our market will grow from about $7 billion in 1996 to $13 billion by the end of 2000. That's quite an opportunity, but while we're doing that, we're also improving the world's standard of living. We're making electricity a better fuel. But that's just the beginning.

To see how this dynamic will play out in the next century, we first have to look at the haves and have-nots. We're ending this millennium with extreme inequalities. People in India, China and Africa have 100 watts of electricity compared to tens of kilowatts of electricity in the developed world. These governments cannot afford to provide the power for every day of the week, not even every day of the work week. So these governments are spending all they can on electrical generation and wiring it to the outlands. They need to make their energy budget go as far as possible. So we see in these countries the earliest adoption of aggressive power conversion for variable frequency motor drives and lighting, and a whole host of other applications, even cellular phones.

What is setting the pace of this change? Most people instinctively understand that knowledge and information accelerate change in our society. But have we really considered the effect of information on wealth? In the last few decades, the industrialized world has applied a huge portion of our investment capital and our human capital in making information less expensive and more available to the world. This is what the information age is all about. Now people throughout the developing world are accessing the same information. It's not hard to understand that when the people in Nairobi have the same level of education and the same information as the people in Silicon Valley, they will also have access to the same standard of living. We are already seeing that happen. Inexpensive, off-the-shelf software puts advanced applications at anybody's fingertips. The internet allows people anywhere in the world to get into the library of Congress. The rapid acquisition of information and skills has allowed developing countries in the last two decades to grow their economies at more than twice the prior rate.

More affordable information has effectively begun to redistribute wealth. Certainly the computer industry has created its share of millionaires in Silicon Valley or in Portland or Seattle. But on a global scale, information has nearly redistricted prosperity. In order to generate greater prosperity and raise our standard of living across the full spectrum, we need to lower the cost of energy. Electricity is poised to become the dominant form of energy in the next millennium. There is no other form of energy that we know of that can hold that place. The promise of electricity can be fulfilled. The catalyst will be the cost of the power conversion systems that we are pioneering. The innovators of the power conversion industry are the pioneers of the next millennium. We're finding new ways to stretch every kilowatt of energy, and in so doing, we are raising the global standard of living. The opportunities for power conversion electronics withstanding, creates wide open opportunities across the globe for developed and developing nations alike. We are moving from the Information Age into the Age of Power Conversion.