CEO interview: Everke of AMS on four pillars of sensing
eeNews Europe caught up with Everke, who has been in post since March 1, 2016, at a busy Electronica and asked him whether much had changed since he had taken the top job at AMS.
“Yes a lot has changed. We have undergone a strategic review. We want to be the leading player in sensor solutions. And the key to the change is very active portfolio management we want to support product sectors where we are number one or can be number one,” Everke said. “And this is based on four pillars of business; optical sensors, imaging sensors, audio sensors and environmental sensors. To complement this, we have our ASIC competencies to provide interfaces.”
It is notable that Everke’s predecessor as CEO, Kirk Laney, is now chief strategy officer for the company, providing for a smooth transition and evolution of strategy.
“It was clear that for a €600 million [annual revenue] company we are active in too many places. That is why we made the sale of the NFC/RFID business to STMicroelectronics (see ST buys NFC, RFID assets from AMS),” said Everke.
“We had already acquired NXP’s environmental sensor business (AMS buys environmental sensor business from NXP); CMOSIS a specialty image sensor business to strengthen the high-end (AMS to spend $200 million on CMOSIS buy); Mazet for spectral sensing (see AMS acquires MAZeT for color, spectral sensing); Cambridge CMOS Sensors (see AMS buys Cambridge sensor startup) for gas sensing.”
Everke said there was additional potential in the combination of these acquisitions. For example Cambridge CMOS Sensors has expertise in hot plate technology for CMOS gas sensors was a good complement to AppliedSensors GmbH, bought two years previously, which has expertise in long-term stable pastes to go on such hotplates (see AMS set to buy German gas sensor firm).
“And now we are spending up to $850 million to buy Heptagon, a company with expertise in advanced wafer-level packaging for optical. This gives the opportunity to include multiple sensor modalities in one package. The market is changing in optical sensing and standard packaging is no longer sophisticated enough. About 80 percent of all investment will go through those four pillars. Other sectors at AMS may be divested or may continue but not receive investment,” said Everke.
Next: About the pillars
While it is clear the inertial sensor market has become worth multibillion dollars per year, driven by deployment in mobile phones, tablets and other portable equipment for such functions as screen orientation and step counting for dead reckoning, the same cannot be said for environmental sensing. Despite talk that environmental sensing including gas sensing could be about to come into the smartphone handset.
“Today the environment sensor market is small. And gas sensing is present more in automotive and industrial. But we are noticing Chinese customers have a strong interest in CO2 levels, in air quality, in alcohol on the breath for mobile markets and wearable fitness bands. Our customers are under pressure to differentiate so it may find take up in mobile.”
The breath analyser as an enabler of the ignition of the engine will come, Everke said, but in the automotive sector developments take a long time. In the consumer market it will happen with a combination of metal-oxide gas sensors together with relative humidity and temperature sensing.
“In mobile the holes are going away. The last two holes are the speaker output and the microphone input so we are developing solutions that put audio and environmental sensing together but it is a challenge.”
In the area of optics Everke stressed that AMS is not going after commodity CMOS image sensor business but is looking to add value with specialist sensing. “We have business with a camera manufacturer that combines an image sensor with spectral imaging that can identify the freshness of produce. We want to be at the high-end for industrial applications or for 4K/8K image sensors. We have a time-of-flight (ToF) chip under development that will be introduced in 2017.” And Heptagon already has a ToF component albeit based on a third party silicon, Everke said.
AMS also has expertise in analog and mixed-signal IC development for audio. In active noise cancellation AMS is an ASIC provider to leading microphone supplier Knowles. “We intend to expand the portfolio step by step. In the past we were pure analog but we are adding digital. Analog provides the lowest power, highest performance and smallest form factor but digital eases design, interfacing and lowers cost.”
Next: Wireless and digital
Untethering equipment, both for power and signals, is also an essential part of modern equipment development and is set to be key to the Internet of Things but Everke did not mention wireless in his four-pillars opening. “We don’t have the strategy to be number one in wireless,” said Everke. “But when we sold those NFC/RFID assets we retained wireless design capability to address wireless sensor nodes. We will gain expertise in Bluetooth Low Energy that will come with Heptagon,” Everke said. Heptagon acquired RF Digital Corp. (Los Angeles, Calif.) in June 2016 for an undisclosed sum of money. “So we have the BLE, RFID, NFC capabilities to provide around sensor nodes,” said Everke.
He added the situation was the same in digital with regard to microcontrollers. “We have a biosensor coming out that will integrate a microcontroller. You don’t need to be a market leader in wireless or MCUs to use the technology and increasingly we need sophisticated firmware and algorithms.” Everke added that there is a need for software for sensor fusion and to manage sensor hubs and wireless to communicate results back towards the phone, PC and cloud.
It could be argued that optical and imaging as technologies are so close to each other as to be a single pillar and that the fourth pillar is inertial sensing as deployed so plentifully by the likes of Bosch, ST and others. So perhaps AMS should be in inertial sensors? “Clearly it’s a lower margin business,” Everke said re-iterating that was one reason why AMS has no desire to compete in commodity image sensors for smartphones.
But, just is there is a way AMS is taking the higher margin ground in imaging so there may be a way to do the same in inertial sensing? “We’re not ruling out anything, ” Everke said.
However, Everke indicated that the possibility of a big deal to bulk up AMS was unlikely and that the possibility of merging with Dialog Semiconductor would not have been entertained under the new strategy. An AMS-Dialog merger was discussed in 2014 but failed (see AMS, Dialog merger talks fail). “It doesn’t fit our strategy. Dialog is a power company,” said Everke.
But in the rapidly consolidating semiconductor industry does a lack of size leave AMS at risk of being acquired itself? “We will have no problem to survive even though we are relatively small. We have told investors that we will provide 30 percent CAGR for the next three years. That is in a semiconductor market averaging 4 percent CAGR and our TAM [total available market] at 10 percent CAGR and our SAM [serviceable available market] at about 15 percent. CAGR. We are in one of the fastest growing sectors of the semiconductor market and we aim to double in size. We can do this organically but we will do whatever it takes.”
We wanted to check with Everke on the progress and implications of one of Kirk Laney’s last big decisions before stepping down from the top job. That was the decision to commit to manufacturing by way of an unusual leasing arrangement on new-build wafer fab at Marcy in New York State (see AMS to spend $2 billion on New York wafer fab).
Next: Manufacturing
“The ground-breaking was in April 2016 and we are on plan to ramp up production in 2018. And that growth I talked about can be done without the fab. Where we can differentiate in silicon we manufacture in house. Where we can use standard manufacturing processes we can outsource,” said Everke. “So we run a mix of in-house and outsource in both the front-end and the back-end. We have our own back-end facility for testing in the Philippines. So we can choose the pace at which we ramp in New York.” The nature of the deal is such that New York State bears the upfront cost of building the shell but AMS owns the chip manufacturing equipment going in to the building and operational costs.
Everke said he would expect to run foundry business in New York and that foundry might expand as New York ramps initially. “It is part of our business. It is not strategic but it is very profitable. It keeps us in touch with our sector and helps us find acquisition targets. TAOS was a foundry partner prior to its acquisition in 2011.”
Everke added that AMS would not transfer manufacturing to what will be a newly-built and presumably highly automated and efficient New York fab at the expense of its manufacturing in Austria, which dates back to the origins of the company in 1981. “We will keep the fab in Austria at the maximum load. But what products get manufactured where is another issue.”
Related links and articles:
News articles:
AMS buys environmental sensor business from NXP
AMS acquires MAZeT for color, spectral sensing
AMS to spend $200 million on CMOSIS buy
AMS buys Cambridge sensor startup
AMS set to buy German gas sensor firm
AMS to spend $2 billion on New York wafer fab
CEO interview: AMS’ Laney on driving a sensor-driven business
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