Infineon aiming for top as auto semiconductor supplier

Munich. With strong system expertise, a broad product line and a zero-defect approach, Infineon wants to be the top semiconductor supplier to the auto industry.

That's the message from Peter Bauer, a member of the Infineon board of directors, in a conversation with Automobilwoche.

Bauer, 45, has led Infineon's Automotive, Industrial and Multimarket division since January. The electrical engineer began his professional career at Siemens in 1986 and has been a board member at Infineon since 1999.

Here are his edited comments:

What is the importance of the auto industry to Infineon?

Currently, it is one of Infineon's main pillars. During the 2003/2004 fiscal year, the area under my responsibility accounted for about 40 percent of our total revenue, in the amount of 7.2 billion euros ($8.67 billion at current exchange rates.) Automotive applications are about 60 percent of that.

What position does that give you in the global market?

At present, we are No. 2 for semiconductors in the automotive industry with a revenue share of about 9 percent. Only Freescale, with about 12 percent, is still ahead of us.

When would you like to oust your U.S. competitors from the top spot?

That is indeed our goal. But it is not so important when we reach it. Our primary goal is profitable growth. Over the last 10 years, we have boosted our revenues in the auto industry by an average of 20 percent a year.

Concurrently, the semiconductor industry has only been able to improve its auto revenues by about 10 percent a year globally.

How important is the status as market leader to you?

That isn't relevant to our business. We are large enough in the auto industry and we can cover the whole spectrum of applications with the necessary investment for research and development. It is more important for us to cover a vehicle component with as many of our products as possible. With our customers, we always try to bring our system approach into play. That means we want to bring them a solution made up of sensors, microcontrollers and actuators with the best possible system coordination.

How are Infineon and its products represented within a vehicle?

Powertrains, vehicle bodies and suspensions, infotainment, as well as the increasingly important safety area. We also count vehicle environmental controls among our products.

Where do you see Infineon's strengths?

In our strong affinity for the auto industry, our more than 35 years of experience, our deep understanding of systems, the right products and a high level of quality.

But in the past, it was mainly defective electronic systems that caused quality problems in the auto industry.

You are right. In the past, we too stood before a range of challenges. That is why we committed ourselves to a comprehensive quality management program called Automotive Excellence about two and a half years ago. The goal is no-error quality.

What progress have you made so far?

In the past five years, we have reduced our parts-per-million error rate to less than half a ppm. That brought us a ten-fold improvement. The share of our products that are delivered over the course of a year without a defect stands at more than 50 percent.

Those kinds of improvements are not accomplished without cost.

That is certainly true. Quality costs money. But deficient quality of individual components in an application critical to safety such as an airbag or a braking system, for example, can be very expensive. You have to initially make investments in higher quality, in production, in processes and not least of all in employees. At the end of the day, it pays off if, for example, recall campaigns can be avoided. I am convinced of the fact that quality in the auto industry will become a differentiating characteristic. As a semiconductor producer, we want to achieve leadership in quality.

What danger do you see from the cost pressures that dominate the auto industry?

When cost issues in an industry are pushed to the forefront, innovation bears the brunt. And so the Europeans who are technologically innovative expose themselves to much more pressure from Asian competition.

Tags: Suppliers

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