Infineon CEO is not optimistic about EU’s semiconductor manufacturing plan

Last month, Nasa’s Perseverance landed safely on Mars, marking the successful completion of Infineon’s most distant mission to date. Because Infineon’s radiation hardening semiconductors power certain cameras and instruments in this detector.

“You better make sure that all of our equipment will not malfunction,” Reinhard Ploss, CEO of the German chip giant, told employees.

Despite being proud, Ploss, the head of Europe’s largest chip manufacturer, is fully focused on projects closer to home.

At present, semiconductors in the automotive industry (Infineon’s largest market) are facing severe shortages worldwide, which has brought to a sudden halt in automotive manufacturing plants around the world. According to agency forecasts, this may reduce the number of vehicles going offline by 1 million in 2021.

The bottleneck involves Infineon and other European chip manufacturers, but it is mainly caused by the insufficient capacity of contract manufacturers such as Taiwan semiconductor Manufacturing Company. This has once again sparked a debate in Europe and the United States about whether the government should invest more in domestic chip manufacturing.

Infineon CEO is not optimistic about EU’s semiconductor manufacturing plan

The recent series of merger transactions has made decision makers pay more attention to Europe’s position in the global chip manufacturing field. Now, Siltronic of Germany is about to be sold to GlobalWafers of Taiwan, China, and Dialog Semiconductor, which is listed in Frankfurt, has been acquired by Renesas Electronics of Japan.

At the same time, Apple announced this week that it will invest more than 1 billion euros in Munich in the next three years to build a large chip design factory.

The European Union has planned to invest huge sums of money to strengthen Europe’s design capabilities, and gradually build the next generation of reliable low-power processor support. At the same time, Germany has provided funds for 18 local semiconductor companies and has pledged to further promote the development of the company.

Munich-based Infineon will be one of the beneficiaries. The company’s share price has recently risen by more than 60%, and they have recently replaced Nokia in the European Stoxx 50 index.

But Ploss said that if the cash is used to build a wafer fab headquartered in the European Union, and its biggest customers are still foreign technology giants, rather than European companies suffering from bottlenecks, then the cash will not be enough to make the country and the US Compete with Asia.He claimed that in this case, “will[生产]It will be of no avail if it develops.”

He added that at present, European technology is not enough to make localized production of chips a reality.

He said: “We used to have a computer industry in Germany, but it is gone forever.” “We have a consumer (electronics) industry, which has disappeared-part of it moved to the United States, but to a large extent To move to Japan.”

“Unless continental Europe rebuilds these departments, I think it will not work to invest in fabs in Europe but produce chips for Chinese companies,” Ploss added. Moreover, the investment required to establish a fab in Europe far exceeds the industry’s current plans.

According to management consulting firm Roland Berger (Roland Berger), the capital expenditures of European semiconductor companies accounted for only 4% of total expenditures in the region, but competitors in the Asia-Pacific region accounted for 63% of the total. TSMC alone invested 20 billion euros in the new cutting-edge park, while Infineon only plans to invest up to 1.6 billion euros in 2021 to bring the new plant in Villach, Austria, to the line.

In order to narrow the gap, Europe may need to cooperate with the Biden administration, and the United States and Europe will work together to develop manufacturing capabilities outside of Taiwan or mainland China. However, according to reports, Brussels is more likely to induce TSMC and Samsung to establish foundries in Europe, rather than trying to persuade companies like Infineon to reverse their outsourcing model.

In the past few years, Infineon has been working hard to simplify its business. They abandoned the low-profit storage unit Qimonda, which later went bankrupt; they also sold its mobile communications unit to Intel. The company has first-class production facilities in Germany and Austria, and also cooperates with Taiwan Semiconductor Manufacturing Co. (TSMC), United Microelectronics (UMC) and GlobalFoundries, using the latter’s production line to manufacture chips with a process less than 90 nanometers.

“If time is not urgent and I have unlimited funds, of course I will invest in the production line and actually fight the production of chips below 90nm”, Ploss said. At the same time, cooperation is also an option, but there is no reason to let Infineon go alone. Row.

In addition, building a fab is cost-effective only when it is continuously used at full capacity, and the market does not have a lot of favor for companies that can deliver during peak times but suffer more losses during downturns.

Moreover, the 2nm node foundry that the EU intends to fund manufacturing is also difficult for Infineon to use, because Infineon’s products tend to use larger nodes. Ploss said the company will not make such an attempt because no one knows which industries in Europe should use these next-generation chips.”

The company is currently focusing on higher-margin automotive chips, which account for more than 40% of its business. With the rise of driverless and electric vehicles, the company is expected to reap the rewards in the aforementioned areas, because driverless and electric vehicles rely more on microprocessors than microprocessor models.

” [电动汽车零部件]By 2025, it will account for 30% of the automotive business,” said Markus Golinski, portfolio manager of the Institutional Investor Alliance. “Infineon is one of the fastest-growing automotive semiconductor companies in the world. “

Infineon also maintains a leading position in the field of power sensors, occupying almost one-fifth of the global market, and manufacturing security chips for credit cards almost every second.

Their completion of last year’s acquisition of US rival Cypress (Cypress) triggered rumors of further integration, especially among the few semiconductor giants in Europe.

Ploss said that such discussions are always common, but the cooperation with STMicroelectronics may exceed the key market share.” Union’s Golinski also believes that this merger will lead to “cultural conflict” and “too many people involved.” .

Ploss said that endless discussions about the establishment of a European chip champion will be “distracting”, especially since the current Infineon stock has just exceeded its issue price after 21 years of listing, and it is beginning to discover its magic. .

The company that once had a penny of stock has benefited from the increase in semiconductor demand, which has become one of the largest success stories of Dax in Germany. But a major investor warned that the company’s exciting growth “cannot last forever” in a notoriously cyclical industry.

Ploss prompted the company to experiment with emerging technologies that could well help explore other products. For example, a time-of-flight chip, which can measure the distance required for photons to travel between two points.

Ploss said: “Infineon is in a good position, but if you assume that you are the greatest, then the next step is failure.”

  

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