Thinking globally, acting locally: The challenge for the semiconductor industry in Europe Global Insight World Economic Outlook Conference 9-10 May 2006, Milan Barbara Schaden
The semiconductor industry at a glance Worldwide revenues in 2005: $227 Billion (2004: $213 Billion) Regional market shares 2005: Europe 17%, Americas 18%, Japan 20%, Asia-Pacific 45% Very high, continuous R&D intensity Very high capital intensity Very dynamic industry high innovation speed Key enabling function for other industries More than proportional need for highly skilled labor Cyclical market evolution with high volatility Truly global industry from product creation to commerce
The universe of microchips A broad range of applications Power Power Generation Generation Navigation Navigation Notebook Notebook Desktop Desktop Wiper Wiper MP3 MP3 Air Air Condition Condition Digital Digital Camera Camera PDA PDA Payment Payment Card Card DVD DVD ID-Cards ID-Cards Page 3 Mobile Mobile Phone Phone
The semiconductor industry Key enabling function for other sectors Economic Impact of the Semiconductor Industry, 2004 $5 Trillion (~ 10% of World GDP) Internet service providers Telecom Operators Broadcast Games Automobile Industrial Defense Medical Space Electronics Industry $ 1240 Billion Semiconductor $213 B Capex: $45 Billion Materials: $26 Billion Source: EECA - ESIA, The European Semiconductor Industry: 2005 Competitiveness Report.
High innovation speed DRAM price development and Moore s Law Price per Mbit [US$-cent] 1000000 100000 10000 1000 100 10 Price per Mbit [US$-cent] Moore's Law [US$-cent] - 34% 1 0.1 1975 1980 1985 1990 1995 2000 2005 201 Source: IC Insights, Gartner Q1/2005.
The semiconductor market Cyclical market evolution with high volatility Global revenues [y/y%] 80 60 40 20 0-20 -40-60 86 88 90 92 94 96 98 00 02 04 06 Note: Monthly data, year-on-year growth rates. Source: World Semiconductor Trade Statistics (WSTS).
Semiconductor manufacturing A global business Increasing technology costs drive global industry consolidation/cooperation High competition and resulting margin pressure enforce the best manufacturing model for each segment Global business requirements (logistics, currencies, capital access, labor cost, tax) drive global production optimization Thinking globally and acting locally: The challenge for the semiconductor industry in Europe!
European manufacturers shifted capacity abroad European Semiconductor Industry, 2004 Market size: Manufacturing in Europe: European semi capital spending: 18% (of world market) 12% (of world wafer production) 10% (of worldwide capital spending) Only Europeans shift capacity away! Share of wafer processing capacity in semiconductor manufacturers' home regions by number of wafers (1998, 2003) 100% 90% 80% 70% 60% 50% 1998 2003 40% 30% 20% 10% 0% America Europe Japan Asia Pacific World Average Source: EECA - ESIA, The European Semiconductor Industry: 2005 Competitiveness Report.
Doing high tech business in Europe needs an encouraging and stimulating framework Pro Europe High-tech clusters (e.g. in Dresden, Germany) In the past, supportive European policy in particular with respect to innovation investment Current lead market in Automotive and Industrial Electronics Highly skilled and motivated labor force Excellent infrastructure Selected To Do s Unleash Europe s R&D capabilities ( 3% of GDP) Improvement in economic conditions (policy to increase entrepreneurial flexibility) Strengthening of market dynamism and innovativeness Stop reduction of financial support for large investments Enable more and stronger multiple partnerships
The European semiconductor industry holds the wolf by the ears Decision pro Europe Competitive disadvantages as there is no Global Level Playing Field Decision pro Asia Weakening of innovation strength in Europe; in the long run negative consequences also for the industry itself Thinking globally, acting locally is a challenge we meet! 0
Backup General company information 1
Infineon has 40,673 employees worldwide* USA : 3,296 employees 2,739 557 East Coast (Richmond, Fishkill,...) West Coast (San José, Morgan Hill) Europe: 23,575 employees 40 Israel Asia / Pacific: 13,762 employee 104 Great Britain 2,745 Singapore 2,549 Austria 1,690 Indonesia 15,844 Germany 466 India 1,567 Portugal** 6,223 Malaysia 2,042 France 1,995 China 100 Italy 58 Hongkong 475 Czech Republic 170 Japan 519 Sweden, Norway 56 Korea 2 * As of December 31th, 2005. ** Incl. ESAS MA. 247 Hungary 128 Other Europe 350 Taiwan 9 Australia
Continuous investment in R&D R&D Spending FY 1997-2005 [EUR m] No. of Patents and Patent Applications (FY 1997-2005) 41,000 42,000 39,000 17% 20% 16% 457 637 739 14% 1,025 21% 1,189 20% 1,060 18% 1,090 17% 1,220 19% 1,300 18,349 13,804 23,853 31,100 30,300 28,200 97 98 99 00 01 02 03 04 05 97 98 99 00 01 02 03 04 05 R&D expenditure [% of revenue] 3 About Euro 1,3 billion for R&D expenditure in FY 2005 More than 35 major R&D locations worldwide 7,400 R&D employees Currently about 42,000 patents / patent applications
Infineon R&D network in Europe 4 Duisburg UMTS Embedded RF GSM SingleChip Wireline Access Supp. Customer System Engineering Product & Test Eng. Bristol High Perform. Cores Karlsruhe Emulators for Microcontr. Corbeil- Essonnes Mixed Signal ASICs for Storage and Consumer Applications Ulm RF ICs, IF ICs for GSM Porto Memories Augsburg Security Software Nuremberg Software Development Sophia Antipolis Baseband ICs, MC Warstein High Power Aalborg Wireless Systems, Wireless Infrastructure Horten Tire pressure & inertia sensors Munich Mixed Signal ASICs, Mixed Signal Cores, Automotive Power, Memory Security, DRAM, Technology, Design Flow, Test and Product Engineering for Storage and Consumer Applications Hanover Wireless Padua Automotive & Indust. Power Flash Stockholm Bluethooth, RF ICs, RF Power Erlangen Memories Dresden DRAM, Logic, Flash, Masks Regensburg Interconnect. Packaging Linz Baseband ICs, RF ICs, Software Dev. Graz Security, Automotive Powe Sense & Contro Bucharest Power Mixed Signal, Security ICs, RF Solutions Villach Mixed Signal Cores, Telecom, Automotive Power, Design Test & Product Eng. for ASICs
Infineon Worldwide R&D network (excluding Europe) San Jose Optical Networking Comp. Periph. Datacom 32bit TriCore / SATA Interface lab Morgan Hill RF Power Transistors Burlington DRAM Product dev. Netanya Telecom Xi'an Super Design Fab, MC, DRAM Tempe RF Power Devices Shanghai Software Customization SMS Albany Nanotechnology Cary DRAM Product dev. Taipei Broadband CPE System development East Fishkill Logic 65/45 Bangalore Software Development Malacca Singapore 8/32 bit µc, Telecom Network & Computer Storage, Mixed Signal ASICS for Storage & Consumer Applications Hsinchu CPE 5
World-class manufacturing sites on 3 continents Investments FY 1998-2005 [EUR m] 8/12" Production Sites 2,578 1,916 1,674 1,530 977 823 1,003 770 1998 1999 2000 2001 2002 2003 2004 2005 1998 1999 2001 2003 2005 Richmond (Virginia, USA) opened (DRAM) ALTIS (Essonnes, France) JV with IBM founded (Logic) Dresden (Germany) 300mm module opened Inotera Memories (Taiwan), JV with Nanya: 300mm module opened Richmond starts 300mm production More than 10 production sites (wafer manufacturing, assembly and testing) 6
Infineon production sites Corbeil- Essonnes Warstein- Belecke Dresden Trutnov Suzhou Wuxi Richmond Singapore Morgan Hill Batam Porto Regensburg Munich Villach Malacca 7
Infineon sales offices in Europe Stuttgart Rotterdam Duisburg Copenhagen Stockholm Dublin Helsinki Hanover Fleet Erlangen Saint Denis Nuremberg Porto Zurich Milan Munich Villach Vienna 8
Infineon sales offices worldwide (excluding Europe) Cary Schaumburg Kanata Bangalore Beijing Seoul Nagoya San Jose Tokio San Diego Osaka Austin Shanghai Houston Taipei Detroit Hongkong Iselin Westford Sao Paulo Penang Singapore Shenzhen Bayswater 9
0 Never stop thinking.
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