Derek Boyd Interviews Ollie Althorpe, STMicroelectronics Ltd

Ollie, recognising that you're something of a veteran in the UK industry, what's your current view of the strengths and weaknesses of the industry in the UK?

I've been involved in semiconductors since 1980, first with TI and then with ST. During that time I've seen many changes in products, customers and markets. In the early 80's, there were still a small number of major UK companies with the leverage to drive growth and had a Global position. We then saw a transition where major non-UK players began to impact our leading electronics companies, and unfortunately UK based companies withered under this, not always due to technology weakness, but principally through lack of courageous investment decisions. In general today, that evolution has meant that no significant global user can be defined as UK or Irish owned. What we have today is a large number of SME's and important midsized companies who have global aspirations within a limited market niche, and a significant number of Multinationals who continue to recognise the inherent capability of the UK's engineering strengths within a global market.

Electronics is truly a global market, estimated to be $340B by 2010. To be even a modest player in this dynamic business you need to think globally. No UK design or fabless company will design a product just for the UK, or probably even Europe, but with a global market in mind. Therefore even the most modest start-up company will have a global vision that is inherent in their DNA. ARM and CSR are examples of this; their products are very narrowly focussed yet they have established significant worldwide sales. ST in Edinburgh focuses on CMOS Sensor design, which has enabled ST last year to become the largest supplier of camera's into mobile phones world wide.

Americans traditionally come from a significant US demand, then deploy into other regions. To some extent, the Japanese and Germans are the same where the product emerges from deep within the customer base which they have direct local access to. As the UK does not have this base, companies must have the global vision in order to be successful. This is actually a strength driven out of weakness. We would love to have the local sales of the US or Japan but we do not, will not have this and there's no point looking back. In realising this, UK organisations have been able to successfully create products and build teams and relationships that have a worldwide impact. We do not feel constrained by our local market and, while this may present operational difficulties, this if embraced is a major benefit in mindset and an asset to their customers.

How do you see the threat from low cost economies?

For the design community in the UK, we have a need to have global access. Without that, it's difficult to sell product at the volumes required to be competitive. Low-cost economies only then become a major threat when we try to emulate them. They can manufacture products very inexpensively, however, physical distance to major markets is a problem and not all products & services are easily transported. Transportation costs are increasing both financial and environmentally and a new natural balance is forming, combining what low-cost and higher-cost economies excel at. With our global vision and agility, the UK is positioned to successfully exploit this if we choose to.

The other concept we need to consider is that China and India are not only manufacturing for export, the current and potential consumption within these emerging economies is enormous. The World economy in 2006 was 30% larger than 2001 at $50 trillion. The growth in the emerged economies of NA, Europe and Japan (53% of the total economy) grew by 3% in 2006. The other economies, almost half of the global economy, grew at 6%. As wealth begins to permeate into the emerging markets, you will see a whole new raft of customers and massive new markets to exploit.

The UK and Ireland have traditionally had our horizon beyond our shores. The geography of our islands, half way between Asia and America, as the City of London has witnessed, has a benefit in time shift. Therefore if we can maintain our Universities at world class, we motivate our best people to join our industry, our potential is not constrained by our local market, but liberated.

How can Government Policy help to exploit this?

In order to fully exploit this situation, it's all about the Knowledge Base. We need to sustain it and motivate new people to come into it. There are weaknesses in that society and Government do not truly understand engineering's (which I include software), impact on the UK economy. This is limiting the vision of what the UK can be.

Society seems to have forgotten that true success comes from consistent effort, not short-term actions. We need to ensure that the basics of maths, science and English in education are secure then empower students and educationalists to imagine.

We need to recognise that different people learn at different times in different ways and all are valid. For example, the target of 50% of young people going into FE is admirable. However, this is not the only way to learn. Many people learn more practically and later realise and they need to improve their theoretical knowledge. We need to accept that 'Theoretical' learning is not the only channel and other ways of learning are just as important.

I see the current situation where many children that do not respond that well academically during the normal education years seem to be written-off and disenfranchised. They emerge from the education system with a vision that they are incapable of doing great things and at such a young age already failures. The greatest challenge we have is use all our talents so children leave school with a strong vision of what they can be.

I personally feel there's a big gap around Government support for Continued Professional Development; what are your thoughts on this?

There is a huge amount of support but it is so fractured and dispersed that it is seen not to be there. There are so many schemes out there, many from Government, that the result is a perception that there is nothing, or it is so demanding to find the correct one it is not worth the effort.

Therefore I believe there is a wealth of activity and a paucity of focus. Take Knowledge Transfer Networks (KTNs) as an example; they are implicitly built on a good idea, and there are already over 20 KTNs. Combine this with many other trade associations (including NMI), RDA's and Institutions also attempting the same links and the outcome becomes so fractured it is not as effective as it could be. We need to find an effective way to provide the focus required through a reduced number of initiatives so that the public and private sector and all the people that provide goodwill, energy, money and commitment are not dissipated.

In education for example; we may only need 3 organisations to channel efforts through. One for Junior schools, one for senior schools and one for higher education. These organisations would need to talk to each other regularly but we do not need any more than three as the direct interface. Today we have hundreds of organisations working with great commitment in this space, which could be coordinated and directed for the maximum benefit by these organisations.

So, what's your own personal vision for the future?

We need to empower smaller organisations to be agile and responsive, recognising that we cannot predict exactly what we will need for the future. We therefore need to create the building blocks for an un-planned economy. If we get the fundamentals right, we can continue to be a great location for engineering. We need to express that there are good, exciting, well-salaried roles within engineering and we simply have to get this message across. I think there's a positive future for semiconductor design in the UK & Ireland through a combination of global vision, high standard of engineering expertise, advanced R&D via our Universities and imagination.