Singapore Semiconductor Industry Association - ISA Vision Summit 2013 Ulf Schneider President, SSIA Managing Director, Lantiq Asia Pacific Pte.Ltd.

Singapore
Semiconductor
Industry
Association
                ISA Vision Summit 2013
                Ulf Schneider
                President, SSIA
                Managing Director, Lantiq Asia Pacific Pte.Ltd.

                Bangalore, 15th February 2013

Title

   “Semiconductor Growth –
the Multibillion Global Jackpot”

       ISA Vision Summit 2013
    Bangalore, 15th February 2013

Speaker’s Profile
          •Project Manager with Siemens Semiconductor Group
1988-1995
           in Munich/Germany

          •R&D Manager with Siemens Components Pte Ltd in
1995-1996
           Singapore

          •R&D Director with Infineon Technologies AG
1999-2004
           in Munich / Germany

            •Vice President R&D with Infineon Technologies in
2004 – 2009
             Singapore                                                               • President Singapore Semiconductor
                                                                      2005-present     Industry Association (SSIA)

            • MD with Infineon Technologies in India                                 • Board Member of Singapore National
2005-2006
                                                                      2006 - 2009      Research Foundation (NRF)

          •Managing Director with Lantiq Asia Pacific in Singapore,                  • Member of Singapore Economic Strategy
2009-2012  Taiwan, China, Hong Kong and India                            2010          Committee (ESC)

Content
• Motivation
        – What is the Rationale behind the Strategy of Governments of the World to
          have a Stake in the Semiconductor Industry??

• Success Factors & Government Instruments
        – What are the Economic Success Factors of our Industry, which
          Governments can influence efficiently and effectively ?

• Associations Influence
        – How can Industry Associations step in to further enhance the Situation,
          for both the Individual Players as well as the Governments’ Charters ?

• Role Models
        – Which are the other Countries to adequately learn from?

• Conclusion & Take-Away’s

ISA Vision Summit 2013 – Singapore Semiconductor Industry Association

MOTIVATION

Scarring-Off Barriers for
Countries Semiconductor Success

   High Industry Volatility, High Risk.
   Highly Competitive Global Landscape.
   Low Gross Margins (in most of the Segments).
   Low Visibility for Short- and Mid-Term Future.
   Extremely high Capital Demand.

What makes the
Semiconductor Industry so attractive
for Country Economics ?
 $0.3 Trillion Industry is hard to ignore …
 Deterministic, long term, Growth Perspective.
 Opportunity to generate high number of Jobs.
 Vision to generate high number of extremely high qualified
  Talents (They make it here, they will make it anywhere ...).
 Gain (or keep) Ownership of strategically important Core
  Technologies . Decrease Dependency on other Countries IP.
 Necessary Measure to hold down Trade Deficit Accounting.

Global Semiconductor Impact

“The Semiconductor Industry serves as a driver, enabler
and indicator of technological progress. Developments in
the industry determine the way we work, transport
ourselves, communicate, entertain ourselves and respond
to our environment.”
SIA Semiconductor Outlook and Review - April 2010

ISA Vision Summit 2013 – Singapore Semiconductor Industry Association

COUNTRY SUCCESS FACTORS

Country Success Factors
for the Semiconductor Industry
    Government Focus
    Human Resources: Low-cost. Highly Educated. Diverse.
    Well-connected league of individual Entrepreneurs
    Abundant and robust Country Infrastructure
    Logistics Excellence
    Stable and predictable political and legal Framework
    Free from natural Disasters.

ISA Vision Summit 2013 – Singapore Semiconductor Industry Association

GOVERNMENT SUPPORT
INSTRUMENTS

Government Support
 Tax Incentives and other Monetary Benefits.
 Provision of Country Infrastructure and Resources.
 Support of Free-Trade and Special Economics Zones.
 Access to world-class Education and Qualification Systems.
 Support to attract foreign Talents.
 Government Stakes in Companies and Institutions.
 Support and Encouragement of Industry-Clusters.
 Protectionism.

ISA Vision Summit 2013 – Singapore Semiconductor Industry Association

ASSOCIATIONS INFLUENCE

Singapore Semiconductor Industry Association
as an Example.
Key Focus Areas

 Voice of the Singapore Semiconductor Industry
 Support of Business Growth through Sharing of Market Intelligence and
  Leadership Development.
 Support of Cutting Edge Technology & Capability Development.
 Support of Talent & Manpower Recruitment and Development.
 Communication and Networking beyond Industry Boundaries.
 Facilitate close Collaboration between Industry, Research, Education and
  Government Bodies.

ISA Vision Summit 2013 – Singapore Semiconductor Industry Association

ROLE MODELS

Taiwan
   About:
       Taiwan represents 70.2% of the worldwide IC foundry revenue and
        55.1% of the worldwide package and testing revenue
   History:
       1960-1980: Prepatory/Seeding Phase
       1980-1990: Constant Growth; UMC/TSMC founded out of local Research Institutes
       since 1990: Full development of the Industry Cluster in Taiwan
   Government Influence:
       Electronic Industry Development Projects I/II (1976-1983)
       Ultra Large Scale Integration Project (1990-1994)
       Financing of basic research and institutions like ITRI
   Success Factors:
       Fully equipped industry verticals, from IC design houses to ODMs/OEMs,
        focussed on strategic growth areas.
       Very good informal networks.
       Young population, a good education system and geographically centered in Asia.
       Highly-developed network of institutions for collaboration (ITRI)

Source: "2012 Taiwan Semiconductor Overview, Page 3”

Israel

Israel
   About:
       Very strong high-added-value R&D orientation as part of the government charter
   History:
       MNC's established R&D centers in Israel in the 70's
       Milestones in the development were the establishment of Motorola Israel in 1964,
        IBM Israel in 1972 and Intel Israel in 1974
   Government Influence:
       Incubator and venture capital programs (Yozma)
       Support of R&D activities via the Office of the Chief Scientist, the 'Law for the
        Encouragement of Industrial R&D“ or the Magnet Program
   Success Factors:
       Well directed government Investments
       High education and motivation level
       Skilled immigrants

Singapore
 Profile of Singapore’s Economic Development:

Source: Singapore Economic Development Board, 2012

Singapore
   About:
       Export oriented industry with a manufacturing output share of global semiconductor
        revenues of 13.5%
   History:
       First assembly and test facilities in the 60's
       In the 80's the industry expanded into high-value add operations and growing further since
   Government Influence:
       The Economic Development Board is guiding industry players to Singapore and is
        holistically involved in taking care of their needs
       Comprehensive incentive programs in place to support set up of R&D, manufacturing
        and international HQ functions in Singapore.
       Recent: Increased investments in education and talent development
   Success Factors:
       Very good country infrastructure
       Talented, diligent workforce
       Stable, pro-business government and committed government agencies
Source: Singapore Economic Development Board, Singapore Semiconductor Industry Association, 2012

Mexico
   About:
       Strong in Electronics Manufacturing Services
       E.g. ranked largest exporter of flat screen TVs in 2011
       80 percent of the world’s largest manufacturing service suppliers operate in Mexico
   History:
       First Outsourcing activities of US companies started in the 70's
   Government Influence:
       Variety of Government Programs: Refund of Taxes on Imports and Exports, 'Sectorial
        Promotion Programm', 'Manufacturing Industry, Bonded Assembly and Export Services'
   Success Factors:
       Low manufacturing costs, approximately 21% less than USA, 11% less than China
        and 3% less than India
       Good Location – proximity to consumer market (US)

    Source: Secretea de Econimoia Mexico, 2012

China
   About:
       Strong manufacturing basis
       Today 4 out of the 15 largest foundries worldwide are chinese
   History:
       Stage 1: Government run Project 908 in 1990 and Project 909 in 1995
       Stage 2: 2000-2003: Episode of major growth, Industry grew from 98 to 463 design
        firms also foundation of SMIC / GSMC
   Government Influence:
       Stage 1: Government financed fabs and projects
       Stage 2: Opening of the restrictive market allowed foreign companies to enter china
        and also domestic companies established
   Success Factors:
       Opening of the restrictive market, attracted private business
       Cheap land, skilled labor, reliable infrastructure, tax benefits and a big market
        allowed further growth

Source: University of Massachusetts, 2012

India

   About:
       Forecast of electronics market size in 2020: $400 billion
       Of that $50 billion expected from semiconductors
       Challenge for India: growing demand could result in a growing current account deficit
        if not sourced locally
   Government Influence:
       Modified Special Incentive Package Scheme (M-SIPS)
       National Policy on Electronics 2012
   Possible Success Factors:
       Large consumer market
       Large engineering talent pool

Source: Frost&Sullivan Report, 2012

India

   Limitations:

       Limited Infrastructure Capabilities:
            Electricity & Water
            Travel & logistics
       Bureaucracy & efficiency of government
        agencies
       Education and talent development
       Critical impact from unions

ISA Vision Summit 2013 – Singapore Semiconductor Industry Association

CONCLUSION

Conclusion & Take-Away’s
• Do not try to simply copy from other Countries’ Success
  Stories. India is unique. For India, go the India Way.
• Take the right Sequence and the right Pace. There is no
  Fast-Track to Success in our Industry.
• Focus on Industry Segments, which benefit India demands
  immediately: Communication, Mobility, Power
  Generation, ....
• For Government Support: Make sure Support reaches the
  intended Benefices.

The India Way on Policies:
A Proposal
A. Government Roadmaps and Policies need to be designed in close
   Collaboration with Industry ‘s representation.

B. Progress and KPIs for Roadmap Deployment need to be carefully
   monitored. Deviations need to be managed. Right Progress needs
   to be incentivized.

C.   India’s huge Network of Entrepreneurs can support the build-up of
     a good mix of multinational and local Investment, MNCs and SMEs.

D. India’s Growth should be built on India’s Strengths. India is famous
   for its huge and highly skilled Talent Pool of Engineers.

E.   Right Focus and Sequence of Steps. Look first for the Fundaments
     and then for the Building.

Thank You !
Let’s look forward to the Future of India’s Semiconductor Growth.
Enjoy with me the Vision of ISA Vision Summit 2013.