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Ziebart positioning Infineon for chip revival

Posted: 07 Mar 2005 ?? ?Print Version ?Bookmark and Share

Keywords:semiconductor? fiber-optics? memory�communications? dram?

Wolfgang Ziebart, president and CEO of Infineon Technolgies AG, said in his first wide-ranging interview that the chip maker is positioning itself for the end of the chip recession as competitors cut profit expectations.

After six months as CEO of the fourth-largest chip maker, Ziebart said Infineon is poised to increase profits through strict cost controls and a focus on promising markets. He also hopes to boost profits in areas where the company has lagged behind.

Ziebart has pulled the plug on failing projects such as wearable electronics. He said the closing of its semiconductor plant in Munich-Perlach has also stemmed losses.

Cost containment has also included the sale of the company's fiber-optics division Finisar. Infineon's Plastic-over-Fiber (POF) product group, an auto industry supplier that accounts for 30 percent of the division's revenues, was also a bust. "Many customers from the automobile industry did not want to buy these products from such a relatively young company," Ziebart said. "They preferred to buy from a company with years of experience."

As a result, the product group was removed from the planned sale to Finisar and incorporated it into Infineon's communications division. "Finisar would have encountered many more difficulties than we do with the sale of POF products," Ziebart said.

Meanwhile, the chip maker is betting big on the memory market by ramping production at a new 300mm fab outside Richmond, Va.

Ziebart, who began his career at BMW before moving to automotive supplier Continental, is naturally bullish on the automotive electronics sector. "Automobile applications for engine, safety and stability management are among the few sections of the electronics business where Europe holds a leading position." With key car makers based in Germany, Infineon is hoping to capitalize.

Hybrid vehicles are a promising market, the CEO said. "These vehicles are loaded with power electronics."

Infineon views itself as a niche player in microcontrollers, although the company has solidified its position in the real-time applications market. "We have no intention of competing against companies such as Intel, Freescale and ARM," Ziebart said.

Infineon is also targeting smart cards. "We have a market share of 40 percent and there are a great number of new applications," Ziebart said. Examples include the introduction of new biometric passports in the United States and electronic health-insurance cards.

Wireless communications is another bright spot as the number of applications grows. Ziebart said Infineon is striving to maintain its focus in wireless. "The market is complicated. Just look and see what's out there: 2G, 3G, Wi-Fi, UWB, Bluetooth all with massive development costs. Many fields are already occupied, and many providers have had to fight for a position with proprietary solutions. We don't want to add another solution." Instead, he said Infineon is concentrating on cooperating with other developers.

Infineon is one of the few manufacturers of single-chip cellphones, Ziebart said, with production scheduled to begin in the coming weeks. Infineon is looking for partners to help integrate complex functions such as processing multimedia data.

Memory chips remain Infineon's dominant business unit with a revenue share of 42 percent in the past quarter. "We have to get better," Ziebart said. "We were not able to make the conversion to 110nm cleanly enough, and now we have to catch up." The chip maker is focusing on the transition from development to mass production, he added.

"We have the investments behind us that others still have to make if they want to convert to 90nm and then 70nm," Ziebart said.

Another key focus is closing the technological gap between Infineon and rivals like top memory maker Samsung. "I am not so foolhardy as to believe that we can measure up to Samsung before the 70nm node," Ziebart conceded.

Infineon meanwhile continues to pursue nonvolatile storage technologies such as flash and MRAM, but Ziebart added that DRAM still pays the bill for continuing investment during the chip downturn. "It is unclear whether [flash and MRAM] will ever become a mass market," Ziebart said. "Maybe a combination of flash and DRAM will develop."

Semiconductor market forces are improving, he concluded. "High inventory, one of the main causes of the downturn, has largely been eliminated," Ziebart said. "The industry as a whole is now operating more soberly than it has in the past."

- Christoph Hammerschmidt

EETimes Germany

- Christoph Hammerschmidt is editor-in-chief of EE

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