BUSINESSWEEK ONLINE : JUNE 21, 1999 ISSUE
PEOPLE

From Rags to 3-D Chips
How K.Y. Ho traded Chinese woes for high-tech wealth

For K.Y. Ho, growing up in mainland China in the 1950s meant hunger and ragged clothes. To help out his mother, Ho, the youngest of three brothers and a sister, peddled vegetables from the family garden. His father, laboring in Hong Kong for most of Ho's childhood, sent back what he could. Later, after the family reunited in Hong Kong, life in a crammed one-room flat was scarcely better. Says Ho: ''We always worried about money, money, money.''

No longer. Now the 48-year-old Ho, living in Canada since 1983, is one of that country's most successful high-tech entrepreneurs. Today, Ho is worth about $143 million, thanks to his 4.4% stake in ATI Technologies Inc., which he started with two friends shortly after arriving in Canada. ATI makes graphics accelerators, the specialized 3-D chips that give popular video games such as Tomb Raider and Quake III their realistic look. ATI's chips are so in demand that the company has earned a 36% market share in the 3-D desktop market. That has put the suburban Toronto company ahead of even industry giant Intel, according to Mercury Research, a market research firm based in Scottsdale, Arizona.

Propelling the growth are big sales to a Who's Who of major computer makers, from Compaq and IBM to Apple and Gateway. Moreover, ATI is now moving into the promising arena of cable TV boxes. ''K.Y. is a supersmart guy. If there's a problem, he wants to make it right,'' says Ted Waitt, the chief executive officer of Gateway. ''If there's an opportunity, he wants to let you know about it.''

Ho has been chasing opportunities for as long as he can remember. His odyssey from semi-rural poverty in a small Chinese village to the affluent Toronto enclave where he is now building a $6 million, 26,000-square-foot mansion could hardly be more dramatic. Set against a backdrop of seismic shifts in Chinese society and politics that have rocked his family for three generations, Ho's rise to high-tech powerhouse status seems a fitting culmination for a family that has endured countless disappointments over the years.

BIG LOSS. Despite his early poverty, Ho hails from a highly educated, upper-class family. His maternal grandfather was a prosperous landowner who fell on hard times after the Japanese invasion in 1937. His paternal grandfather was a book dealer and teacher. After the communists came to power in 1949, both grandparents lost most of their property. Ho's father, also a teacher, was unable to find work and left his wife and young children for a series of factory jobs in Hong Kong when Ho was still an infant. Twelve long years later, Ho and his mother joined Ho's father and an older brother. Ho's other brother and sister were forced by the government to stay behind.

Later, Ho earned a spot at a top Taiwanese college, National Cheng Kung University, where he studied electrical engineering. Away from home and the watchful eyes of his parents, Ho didn't hit the books much. Friends remember him as an average student. ''He spent a lot of time outside the library,'' recalls K.D. Au, a classmate who now owns the computer-peripherals wholesaler Althon Micro Inc. in Los Angeles.

But once in the job market, Ho thrived. After graduating from university in 1974, he raced through several electronics-industry jobs at big-name corporations in Hong Kong, including Control Data Systems Inc. and Philips Electronics. Ho learned all about video games in 1981 when he went to work for Wong's Electronics Co. Ltd., a leading Hong Kong manufacturer that dealt regularly with hotshot game makers Atari and Coleco. ''He learned everything very, very fast,'' recalls Benedict C.M. Wong, the company's president.

Affable and quick with a smile, Ho nonetheless often disagreed with his superiors. ''He's so straightforward that he could hardly get along with the boss,'' recalls Patrick Hung, a classmate who later worked with Ho at Wong's. In 1983, Ho left for Canada, where many Hong Kong Chinese went looking for a fresh start. Ho's first impression: ''A lot of open space and lots of opportunity.''

BIG GAMBLE. In 1985, Ho hooked up with two other Hong Kong emigrant engineers working in computers to found Array Technologies Inc., later renamed ATI. The idea was to make graphics-enhancing components for PCs, then mostly slow and bland monochrome affairs. The threesome pooled their money, quit their jobs, and leased space in an immigrant Toronto neighborhood. With his years of managerial experience, Ho became CEO, while his partners concentrated on the technical side of the business. It was a huge gamble to enter a market with unproven demand. ''We were young and didn't know any better,'' recalls Lee Lau, now the company's vice-president for strategic planning with a 12% stake in the company. The third partner, Benny Lau, is vice-president for product development.

Starting out as a tiny specialty operation that built plug-in boards for computer hobbyists, ATI soon signed up Commodore and Kaypro as early customers. By 1993--the year ATI went public--the company was evolving into a hot prospect as graphics cards became a must-have item for every kid with a PC and a yen for shooting up space aliens.

To build the business, Ho has been willing to do whatever it takes. Three years ago, for instance, Ho worked with arch-rival Intel to design the accelerated graphics port standard that now dominates the business. And he has steadily improved the speed and performance of his chips. That has helped ATI keep its lead as 3-D graphics have become increasingly prevalent, with more and more showing up online, especially in E-commerce applications.

All those applications require the sorts of chips ATI specializes in. Sales have skyrocketed in the past 18 months, as big computer makers begin building its 3-D chips into their PCs. ATI profits are on track to rise 67%, to $159 million this year, on sales of $1.2 billion, up 61%, according to John Wilson, an analyst with Warburg Dillon Read.

The graphics business, though, is notoriously volatile. Former high fliers like Tseng Labs, later acquired by ATI, and S3 have had their share of troubles. A single innovation from a competitor could also spell hardship for ATI by wooing away computer manufacturers or devoted teens who shell out $199 for ATI plug-in boards. ''We all know the same technology,'' says Ho. ''The key is to work hard and make sure you execute.''

FAMILY CRUISE. That's never been a problem for Ho and his partners, whose private and business lives rarely diverge. They make all major strategic decisions together, though Ho is in charge of running the company day to day. Nearly every Saturday night, the three partners, their wives, and seven children have dinner out together. A few years ago, the whole bunch cruised the Mediterranean.

Ho also makes a point of meeting his father for lunch on Saturdays at a Chinese restaurant near the office. And he is proud to have helped his sister and two brothers make their way in Toronto, though they live in a wholly different orbit. His sister works on the production line of a garment factory, one brother works in wholesaling, and the other is a tailor. While Ho bought his siblings houses, he never offered them jobs at ATI because, he says, ''it's a corporation. You don't mix it up with family.''

At work, Ho is known for his skill at defusing confrontation. When a major customer recently failed to deliver promised information, an angry senior ATI manager wanted to upbraid him. Ho suggested that the manager simply ask how communications might be improved. ''You don't want to point fingers,'' says Ho. ''You want the business.'' Says Bill Dalton, head of Midland Bank PLC and former chief of HSBC's Canadian unit, ATI's bank: ''K.Y.'s not a big ego guy.''

Big ego or not, business is booming for Ho. One fast-growing new market for ATI is Chinese computer makers. Ho believes that China's modernization may translate into a vast new consumer market for ATI. In fact, lately Ho has been making visits back to the country where he spent his impoverished childhood. It seems Ho's tumultuous life has now come full circle.

By Joseph Weber in Thornhill, Ontario, with Andy Reinhardt in San Mateo, Calif.

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