Electronic Products & Technology

News

electronica 2010 CEO Round Table: Semiconductor industry emerges from the crisis in better shape

The "CEO Round Table" was held the first day of electronica 2010, as part of the electronica Forum and attracted an audience of more than 350 visitors, exhibitors and media representatives.


The CEOs from four leading semiconductor manufacturers – Infineon Technologies, Freescale Semiconductor, STMicroelectronics and NXP Semiconductors – discussed empirical values and growth prospects for the industry under the motto “What lessons have we learnt from the crisis?” at the Munich Trade Fair Center.


Peter Bauer, CEO of Infineon Technologies AG, Henri Richard, Senior Vice President Global Sales and Marketing of Freescale Semiconductor, Inc., Carlo Bozzotti, President and CEO of STMicroelectronics and Rick Clemmer, President and CEO of NXP Semiconductors discussed before an audience of more than 350 visitors at the electronica Forum the economic crisis in 2008 and 2009, its background and the impacts on the semiconductor industry. However, the participants on the podium also examined the economic crisis in 2000 and 2001, and the way in which it differs from the current situation. The podium discussion was chaired by Kilian Reichert, a freelance journalist.


The participants in the podium discussion agreed on the background to the recent crisis compared with the crisis at the turn of the century. In 2000 and 2001 a large number of manufacturers developed products that did not match customers’ requirements and were therefore confronted with a lack of demand. The existing demand was only frozen in 2008 and 2009: Banks no longer provided loans and the industry was faced with extreme currency fluctuations. Both end customers and industry initially stopped making purchases and investments during this period. However, this situation is now being remedied with numerous purchases and investments, thus resulting in strong growth over the last few months.


In particular, large companies in the industry have for the most part reacted with great flexibility and prudence to the sales losses of up to 50 percent. In the last few months capacities have been increased again at almost the same speed as they were initially reduced in companies. The participants in the CEO Round Table all conceded that delivery bottlenecks occurred frequently and are continuing to do so. They said that the crisis had created one of the most important experiences which will primarily be evident in the automotive industry in future, i.e. the need for even closer cooperation between the semiconductor industry and its customers in order to interlink demand and production as closely as possible in future and carry out long-term planning.


According to the participants in the CEO Round Table, however, sensitivity to markets and end customers has also increased during the last two years. They said that every fluctuation on the end customer market becomes even more noticeable in companies the further they are away from the customer’s value-added chain. They added that a better understanding and closer observation of these markets are therefore one of the most important experiences from the last two years.


According to the participants, however, it was important in particular to extend key competencies in a company during a crisis and forge ahead with research and development – also in view of declining sales and necessary savings. Since business cycles are becoming increasingly shorter by contrast with the capacity cycles in the semiconductor industry, it will be even more important in future to ensure that companies have the greatest possible flexibility in all areas.


Due to seasonal reasons, but also because the largest supply gaps have already been filled during the last few months, the industry is anticipating a short-term drop in growth in the fourth quarter of 2010. The participants in the podium discussion agreed, however, that the industry can basically look forward to a stable upswing. There was also agreement regarding the expectations for electronica 2010: Numerous new customers and an intensive international exchange of ideas and experiences regarding technologies and innovations in the industry. According to the podium discussion participants, the areas of healthcare/medical, safety/data protection and energy efficiency will be the prime movers behind growth in the semiconductor industry in the next two years.


However, one thing also became very clear during the discussion: The semiconductor industry is a key industry in the development of technologies which will determine our lives tomorrow. It will provide solutions to many social challenges of the future. Since the innovation density is well above-average, the semiconductor industry will be subjected to increasingly stronger fluctuations than other industries and will also have to recognize its opportunities during times of crisis. At the end of the CEO Round Table, moderator Kilian Reichert therefore referred specifically to one of the contributions from the podium: “Never miss a good crisis”.