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Michael Lehnert, CEO LFoundry
Derek Boyd Interviews Michael Lehnert, CEO of LFoundry
The first thing I wanted to ask is that it's very unusual to set up manufacturing in Europe just now, in general the trend is to set up in the far East, can you explain the background and the rationale?
We have an excellent manufacturing site here in Landshut, which is in the centre of Europe close to the automotive industry; we are somewhat in the heartland of Germany so the location is perfect. We have an excellent team of people working here all are highly experienced industry professionals who are dedicated to ensure we are successful in this tough market.
I can sense real optimism from being here as well. You just talked about the advantages of people and location, do you see any disadvantages?
LFoundry is targeting the European Pure Play Foundry market, so we really see no major disadvantage however we do see significant advantages, like time zone; we are located in Europe; we can talk with our European customers in real time, we are speak all the necessary languages; French, English and Italian. We are close to the customers both geographically and technically, so we see no disadvantage.
What’s your view on business conditions; there's major disruption going on in the world just now, things just aren't normal at all at the moment so I was wondering how you saw those factors?
Yes we see the circumstances for the semiconductor industry are very difficult at the moment. We see this doubt and we hope the bottom is reached at the moment and it looks like it. Fortunately for our company this does not cause a major problem as we have a 'load' guarantee from Renesas, our former shareholders. They will guarantee us production loading for 2009 so LFoundry has no problems for 'loading' for next year. In addition we will continue discussions with Renesas regarding loading for 2010. We are optimistic that in 2010 total business will go up and then we are prepared for the upturn in foundry capacity requirements.
Tell me about your plans for developing the business. It's going to be very different; I think there will be a big business and culture change from Renesas facility to LFoundry. What do you see as the main challenges there?
Of course, we have in the past been a dedicated manufacturing site however we have always been close to the sales team and marketing division from Renesas, so our challenge will be to develop upon these skills and to transition from a pure manufacturing site to a fully established foundry company. We will set up complete foundry sales and marketing teams here in Landshut. In addition to support from Renesas, we have also acquired experienced external sales people and of course we will invest in developing this team. The second interesting and difficult thing will be our own technology development, here we have an extensive portfolio of technology licenses and additional agreements with Renesas which will facilitate the development of our own PDK's and customizable process technology.
Can you tell me about your target market and customers?
Our target market is the low to medium volume market for many applications including automotive and bio-medical applications; indeed any market which requires high quality manufacturing. This will be also one of our slogans because we want to manufacture high quality and high reliability products.
We will of course support all design and fables companies operating in the mixed signal analogue market, however another key target area for us will be second source manufacturing. Here we will support IDM's and also some fabless companies which require an alternative manufacturing source to complement or replace existing manufacturing sites. We will provide a fully qualified backup manufacturing facility.
We are a pure play foundry, however we are also open to work with technology partners who are seeking to develop customised process IP to meet specific market requirements. We are open to develop IP for our customers that will help ensure their success in the market in which they choose to play. LFoundry recognises the importance to having the right IP to serve the appropriate markets and customers.
We frequently hear views about the long-term evolution of the foundry model where there will only be 3 companies doing semiconductor manufacturing on the planet as, so the argument goes, the cap-ex becomes so expensive you need to run huge volumes to depreciate it and in the end there will only be huge facilities owned by a very few companies. What are your views on the long-term changes of the industry?
This might be correct for digital CMOS which is shrinking down to smaller and smaller technology nodes. Maybe here not so many will survive because as you said capital investment is most important. However for advanced analogue mixed signal you have to invest in your IP, in technology know-how and in your people. Here I see a niche market in which LFoundry can be very successful initially Europe. We have a strong team of highly experienced and loyal semiconductor professionals here who are dedicated to the success of LFoundry. The human capital is very important for the advanced analogue mixed signal market and for the low volume customisable manufacturing, we therefore see a long term position in this market space. We do not see a radical deviation from the traditional shrink path that the analogue market has experienced over recent years. In the last ten years analogue mixed signal technology has shrunk from 1 micron and now it’s at 0.35 micron so maybe it will take another ten years to go down to 0.15 or 0.13. So it’s not comparable with digital CMOS; where you have got to invest so much in manufacturing technology; in the analogue world you have to invest in other things.
In the UK just now there is a lot of concern about skills and human capital especially with young people coming in to the industry and there's data that shows the number of graduates are declining. I was wondering about the situation in Germany; do you see the same concerns about young people coming into the industry or is the situation different here?
I see a similar situation and therefore it’s important that in Europe we do something to motivate these young engineers. Many companies are talking with the European Union to promote the semiconductor industry again and I can already see some focus with ENIAC and other programmes in Europe to support the industry. This is necessary to keep the European electronic industry growing for the future. In my opinion, the electronic industry is key for Europe as is Automotive and many other industries. Therefore it is important for all Nations; Germany and UK to motivate young people.
I'm very interested in how we can achieve that. I think young people seem really interested in all the gadgets that they have today but we have a real challenge in motivating them to come into the industry - how do we achieve that?
That is a good question! A good and difficult question! Of course all these toys are interesting to us, everybody is dealing with an i-pod, a camera, a laptop or something. My children are between 3 and 9 years old and are already playing with computers so they grow up with sophisticated tools. I think they should also be interested in why is it working and how it is working, so if we can address the homes and the parents then I think everybody will be motivated. LFoundry will work with universities within the education community in Germany; and in addition we are working with the Fraunhofer institute and here we will support education through sponsorship activity.
Finally, I want to ask you about your long term vision for the LFoundry business; what would success in five years time look like?
I want to look back and see that we have established a successful European foundry service with an excellent perspective and a stable yearly growth rate. Our vision is to be European advanced analogue mixed signal provider with unparalleled flexibility and building a long life partnership with our customers.
I feel it's also vital that we have some differentiation to other companies and so this means that we have to develop our own IP. We will utilise smaller companies in Germany and the UK which will provide us some IP and we will set up special processes, special technologies for niche's to have some enhancements for our customers. It's a hot market and of course partially it's price driven but the success will come when we provide enhancements to our customers and have differentiated product that adds additional value.