SAN FRANCISCO — Semiconductor companies need to shift their
focus from building fabs to building systems, and they must
engage with customers at deep technical levels if they are
to survive the current wave of consolidation. That's the
view of Wolfgang Ziebart, chief executive of Infineon
"The major thing giving semiconductor makers a
competitive advantage has evaporated," said Ziebart in an
interview in the San Francisco offices of EE Times. "Today
everyone has access to the same process technology at
roughly the same time. This access used to be what
differentiated the best from the worst semiconductor
companies, but now it has evaporated," he said.
"What's replacing process technology as a differentiator
is systems know how, and it must be specific to a market
area. Wireless, for instance, is too broad. You must have a
focus segment such as
Wi-Fi or Bluetooth," said Ziebart.
This shift is coming at a time of consolidation among
chip and systems makers, forcing engineers at both
companies to work together in close collaborations.
"What used to be markets are now just a few companies. In
mobile phones, for example, five players now make up 85
percent of the market," he said.
"This means your approach as a semiconductor maker has to
totally change. You don't approach your customers with a
marketing department that does studies and finds clusters of
demand and establishes product lines to address them. That's
old thinking. Today you have to engage with your customers
in a much more intimate way," Ziebart said.
Responding to the shift, Ziebart has reorganized Infineon
into a set of small relatively free-wheeling business units
chartered to engage systems makers on technology problems at
the level of R&D in core markets such as cellular. Ziebart
spoke with EE Times after attending the Steve Jobs keynote
at MacWorld where Jobs unveiled new
software features for the iPhone which sports a
baseband and RF transceiver from Infineon.
Ziebart would not discuss Infineon's relationship with
Apple, but he did describe two aspects of the chip maker's
initiative in cellular. Infineon is focusing on the RF
modem area where it has a leading position rather than
processor which is still relatively fragmented.
"Cellphone makers see a lot of differentiation at the
high end, so no
platform solution as such has emerged yet. There are
various applications processors for different kinds of
functions like media
processing and number crunching," he said.
Separately, Infineon is working with engineers in China
to create a variant of the DVB-Handheld standard that will
be used for mobile TV broadcasting in the Beijing Olympics.
However, Ziebart cautioned China's developers about the
risks of developing their own standards such as China's
specification which he said may not see wide use outside of
Ziebart pointed to Japan's difficulties trying to
establish its own broad of second-generation cellular
technology as a cautionary tale. "They were left behind"
when much of the rest of the world adopted GSM, he said.
Cellular is just one of a broad set of markets for
Infineon that also includes automotive, industrial and wired
communications. The fact that the company addresses such
diverse areas is not a concern, said the CEO.
"Synergy is priority #2. Priority #1 is for every
business we are in to have a sufficient return. As long as
that's the case we don't care about too many of the other
details of the business. There are no strategic businesses
in our company, only profitable and unprofitable ones,"
As it turns up the volume on its systems focus, Infineon
is getting out the business of building DRAMs and fabs.
Ziebart said in 2009 Infineon will hold less than a 50
percent stake in Qimonda, its former
Infineon currently holds three-quarters of Qimonda's
shares. Just how the chip maker will divest those shares has
not been determined yet.
The company has also decided it will build no more fabs
for 65nm and finer process technologies. However, Infineon
has set up a power semiconductor fab in Malaysia, in part
because its automotive customers want suppliers to assume
full responsibility for such parts.
Infineon was an early partner with IBM in its
Alliance that has developed 65nm technology. Freescale
has joined the group for 45nm technology, and
STMicroelectronics has signed on to co-develop 32nm
"A lot of companies [in the alliance] went their own
direction at 65nm, and Infineon has its own 65nm libraries,"
Ziebart said. "But at the 45nm node, we will try to go with
a more common
library and just add a few specific elements to it as
needed," he said.
In contrast, "there are still many Japanese chip makers
setting up 300mm fabs and doing their own advanced
technology development," Ziebart said. "They have a lot of
manufacturing know how, but the systems-level know how is
still locked up in their customers such as Denso and
Panasonic, [thus] Japan's market share has really declined
in the last decade," he added.