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Infineon's Ziebart: European chip industry needs subsidies

Posted: 04 Oct 2007 ?? ?Print Version ?Bookmark and Share

Keywords:government subsidies? European chip industry? Infineon CEO Ziebart?

In an interview with German newspaper Sueddeutsche Zeitung, Infineon CEO Wolfgang Ziebart called for more subsidies for the European semiconductor industry, or the industry would be forced to relocate.

Repeating statements he made earlier this year, Ziebart described the semiconductor industry as the most globalized one. "During the production process of a semiconductor chip, wafers are shipped several times around the world, and since they are so small, this does not affect the price. For us this means every location is in competition with all others."

Besides salaries and availability of highly educated experts, government aids are the third major factor for the decision where to build new research and production facilities, Ziebart said. "We finally have to understand which game is played worldwide. In the European Union (EU), aid for large investments is limited to about 15 percent. In Asia, aids are significantly higher. And in the United States, AMD is said to have received $1 billion for its new fab in upstate New York. This would be unthinkable here."

The Infineon CEO stressed that these subsidies help recipient companies become profitable much faster. "By means of the aggressive subsidies policy in Asia, fabs and production lines achieve break-even in two and a half years, while in Europe it takes five years. Given these blatant differences, the decision of the companies [where to build their production sites] is obvious."

Ziebart also suggested changing the criteria Belgium is using to grant aids. "Today, the EU in the first place pays subsidies for regions in order to assimilate standards of living," he said. "I am asking: Wouldn't it make more sense to orient [the subsidies] on industry branches and spend the money for future-oriented industries?"

In this context, Ziebart pointed out that the semiconductor industry has an increasing importance for the competitiveness of other industries such as electronics in general and automotive. Also, he claimed that each job in the semiconductor industry helps to create 1.5 jobs in adjacent sectors. "Dresden as Europe's largest semiconductor cluster is a good example. Thousands of highly qualified, tax-paying jobs have been created there," he said.

Ziebart praised the German-language countries as excellent locations for R&D, adding that the importance of R&D for the semiconductor industry is rising. However, he noted that low-cost countries such as Romania or China also play an increasing role in the company's R&D activities.

Changing course
At the same time, the close proximity to customers becomes more important, Ziebart said. "Our developers and those of our customers are collaborating constantly. Thus, Infineon changes its character from a producing manufacturer to an R&D partner for our customers," he said.

In the interview, Ziebart dismissed the idea of creating a kind of "European semiconductor champion" similar to the creation of Airbus Industries. "This would not make sense," he said. "In the past, the sheer size of a company used to be an important factor in the chip industry. This is no longer the case. It is more important to collaborate with partners who have a similar focus. This is not the case with the other large European semiconductor manufacturers NXP and STMicroelectronics."

Ziebart also announced his company's return to profitability in 2008. For 2009, he dangled a revenue margin of 10 percent. He also said Infineon would decline any takeover bid. "And in the semiconductor business, no investor ever has tried to get into a company," he said, adding that presently the situation at the financial markets would discourage private investors.

- Christoph Hammerschmidt
EE Times Europe

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