Hanns Windele: With 2014 delivering 12 per cent revenue growth for Infineon, what have been your differentiating factors from other companies in the sector?
Reinhard Ploss: Our most important differentiating factor is that we have refined our market approach. We started with technology differentiation – that’s our background – and we invented a lot of innovative technologies offering extra functionality and better performance. Today, we are taking it to the next level by thinking about technology, application and final use. We call it ‘from product to system’. This is because you not only have to think in terms of great technology, but you have to put customer success in the centre. We go one step further. We explore tomorrow’s requirements in order to be successful, for example in cars.
Hanns Windele: Is it a case of not trying to replace what your customers are already doing?
Reinhard Ploss: Looking at automotive, we have a very well sorted market strategy. We do not intend to compete with our customers. However, one key success factor of semiconductors is a continuing story of system integration. When you integrate a system, there is always the next system to integrate. Previously, you had single transistors, simple ICs, software and sensors.
Now we put this all in one chip or package. This is one way we do ‘product to system’. We know what our customers need and seek to offer them integrated solutions to enhance performance of the overall system. Of course, for those customers who want to do their own integration, we offer support. At Infineon we want to stand on several legs: technology, application expertise and a system understanding of the success factors for specific markets. We keep in mind that there could be a risk if you follow only one specific customer, even if he might be very important.
Hanns Windele: How closely do you work with OEMs?
Reinhard Ploss: In some areas very closely. It is important to realise that there is a need in specific areas for direct interaction with the OEM, especially when you have to understand the driving factors of the system.
In one of our markets – mobile phones – we have entered the MEMS silicon microphones space. But if you think of MEMS only, that’s not enough. You have to think of the ASIC that’s processing the sensor signal and even transform it into digital.
So we have to talk to smartphone companies directly in order to understand what they want. Who would have thought there was a requirement for high-range dynamics for recording a rock music festival? We developed the range capability for the dynamics on the microphones. But we want also to enable the user who wants to make a phone call from the rock concert without the other person hearing the background noise. That’s the next game. What you need for this is several microphones on the handset, all with – in principle – the same characteristics, so you can eliminate the background noise ‘numerically’.
Hanns Windele: Let’s look at your megatrends: energy efficiency, mobility, security… is there any one that stands out as more important than the others?
Reinhard Ploss: Currently there is a lot of hype on security. This is a huge elephant in the room and people don’t know how to manage it. But it is also one of the core topics to be addressed, as it is a key enabler in many things, especially when it comes to the Internet of Things including Industry 4.0. If you start running your household as a totally interconnected entity, this can be an open door to anyone who wants to misuse what you have. You need security: everyone agrees. But the question is how to go about it.
Hanns Windele: Does this include the idea of the ‘security of silicon’?
Reinhard Ploss: Hardware security is the right approach. We are paranoid when it comes to the right architecture. Over time we were able to improve it. We used to build special elements into the chip in order to create security and to react to attacks. Today, there is no need for this. What we do with our current generation of secure chips is provide security by concept, with all data processed in encrypted form.
After this level of encryption you come to what I call the ‘real lock’, which is an even higher level of encryption. So the risk of the chip being modified by manipulation, we believe, is minute. At the same time, the whole infrastructure of how we manufacture requires a certain security level. Even within our company there is no one person who knows every detail of a chip.
Hanns Windele: Is the area of security an opportunity for collaboration between companies?
Reinhard Ploss: Certainly. But this is one area where I think industry needs to have the backing of politicians. We can talk together about technology and products and work together very closely. But in order to do that, we need competition laws providing enough space.
How can you establish a multi-company standard on a global basis, starting in Europe, if there is no interaction with your competitors allowed due to anti-trust legislation? The automotive industry has to work together on this, so have the engineering industry and the software people. If the politicians really want the industry to deliver on this, they have to provide us with the right framework.
Hanns Windele: How do you think the European semiconductor industry should be promoted?
Reinhard Ploss: First of all, Neelie Kroes’s vision of ‘Airbus of Chips’ triggered a good discussion about the set-up of the European semiconductor industry. At the European Commission’s Electronics Leaders Group we heard different voices saying: ‘we need more production’, ‘we need more technology,’ or ‘we need more IP’. In the end we were able to bring it together and define a common position.
The question is to what extent we have to invest in European production capacities in order to ensure the secure supply chain for our customers in Europe. The Airbus of Chips is ‘system thinking’ and the key elements in it are that you own the technology, design and capability of embedded software.
Hanns Windele: How do we attract more people into studying electronic engineering?
Reinhard Ploss: Education is important, of course. I think our universities are very capable. So why aren’t more people studying engineering topics? One explanation could be that people today want to serve a purpose in life. We saw a significant positive change when we positioned Infineon not only as a semiconductor company, but as an organisation addressing the challenges of global society. The world needs higher productivity to fund better living. We have to make more out of less – for example, more mobility with lower CO2 emissions, or higher crop yields with less land use.
Hanns Windele: Perhaps the most iconic management move you have made is the acquisition of International Rectifier. What impact has that had on your business?
Reinhard Ploss: The acquisition of IR was a bold move. We constantly look into opportunities to foster our long-term competitiveness – and the idea was that the acquisition would offer economies of scale and scope. We knew we had to grow in the US, getting closer to the Valley and the new trends that are created there. The acquisition strengthens Infineon’s position.
We are also convinced that IR can help with their know-how pushing further our ‘product to system’ approach. Another advantage is that Infineon has been working very successfully with Tier 1 customers, while IR adds a strong approach to consumer-oriented markets.
Hanns Windele: What are the key factors that will ensure this is a good acquisition?
Reinhard Ploss: Clarity and speed. Uncertainty is the enemy of everything. We identified the key leaders at IR that we wanted to stay with us and we have kept the organisation as it is. You cannot change everything in one day. Then we integrated both organisations into one and finally we will have unified processes and IT systems. We also identified areas to ring-fence in order to create value. Sometimes it is better to accept that fast decision-making causes some losses. But ambiguity has the greater loss potential.
Hanns Windele: Automotive is a strong area for Infineon. Do you expect a shakeout or consolidation in this area among the main players?
Reinhard Ploss: On the one hand consolidation is always a topic in the semiconductor industry. But often, when there is an attractive target, it is very expensive, or it is not offered. On the other hand, the automotive industry is interested in keeping a broad and competitive supplier base. Currently, two of our competitors are trying to combine their businesses.
But this will not change the game. Infineon has been looking regularly at how we can develop our strengths in the automotive sector. We are happy with what we have achieved organically, and we now complement our competencies with the acquisition of International Rectifier.
Hanns Windele: Does it help to use brand comparisons, such as ‘Infineon is the Porsche of the semiconductor industry’?
Reinhard Ploss: We are much more modest than that! I think we would like to be as fast as Porsche, but also attracting and competing in a larger volume market like Volkswagen. We would like to say we have the quality of Toyota and the load capability of MAN as well as the speed of a Porsche.
If I gave you €1,000 what would you do with it?
My family would ask to go on holiday and if there was any left over I’d buy a model plane.
What are your hobbies?
What non-business books do you read?
I am a big fan of science fiction because it is interesting to take a completely different view of the future.
If you were sent to prison, who would you choose to share your cell with? Mahatma Gandhi for example, or Martin Luther King. It should be a person who has a strong enough conviction to be prepared to die for it. Those are the most interesting and most reliable people.
Hans Windele is Vice President, Europe and India at Mentor Graphics. www.mentor.com
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