Handelsblatt exclusive Cashing In on Chips

While on a visit to the Consumer Electronics Show in Las Vegas, Reinhard Ploss, the head of the DAX-listed electronic chip-maker Infineon, talks networked cars, the Internet of Things and industry consolidation.
Quelle: dpa
Reinhard Ploss's company is a big player in the auto parts industry.
(Source: dpa)

Reinhard Ploss has been chief executive of Infineon since 2012. The blue-chip DAX-listed firm produces semi-conductors for power supply and security applications, and with around 35,500 employees, achieved revenues of €5.8 billion ($6.1 billion) in the fiscal year 2015.

In 1986, the engineer joined the company, which used to belong to Siemens and went public in 1999, and has slowly risen through the ranks. Today he is in the hustle and bustle of Las Vegas, among the thousands of exhibitors, robots and colorful consumer electronics from around the world vying for attention at the industry-leading Consumer Electronics Show.

Beyond sharing thoughts about future technology, Mr. Ploss told Handelsblatt he expected more consolidation of chipmakers in coming years and suggested his company could be part of that process. He rejected the notion that Infineon itself could be a takeover target, despite the German firm reportedly drawing interest from Asian rivals and suggested if anything, takeovers might be the other way around.

 

Handelsblatt: The Consumer Electronics Show here in Las Vegas shows that the technology industry is making every effort to network every aspect of our lives. Is that desirable?

Reinhard Ploss: That is a matter of social culture. Personally, I don't use so much of it, though I do like to use smart thermostats in my vacation home, for example. And many people want to collect data themselves; just look at fitness trackers. Real value can be created in the care of elderly people, for instance, in turn opening up new business segments for companies.

Does that also apply to the use of artificial intelligence?

First we need to establish for what products or services artificial intelligence makes sense. And there is a lot of hype around. Will vacuum cleaners move around at home using artificial intelligence? Lawnmowers? Eventually, yes, but it surely makes more sense in other areas, like self-driving cars.

According to a study by telecommunications company AT&T only 10 percent of manufacturers believe they can protect their smart devices from hacker attacks. Why does the industry handle security issues so carelessly?

Security is certainly of great concern to the industry - and Infineon has suitable solutions at the ready. For example, ways to identify trustworthy senders of e-mails. But look at how many people reveal a great deal of private details via Facebook or other social channels. Many continue to use WhatsApp, for instance, despite Facebook's announcement that they would link data between their services, even though they had announced otherwise before.

Have you stopped using WhatsApp?

Yes, I have. It is important to me that user and also industry awareness of data sensitivity increases. That is how more security can be a competitive advantage for German manufacturers, which by the way, are better positioned in the international market than many people like to think.

Are you referring to Silicon Valley, where Google and Apple have now seriously downsized their much vaunted plans to build autonomous cars?

Yes, the Valley has modified its plans. And we can see clearly that the German automobile industry is doing a fantastic job.

And yet, vehicle pioneers like Tesla were launched in California, and it was Google not BMW that constructed the first self-driving car.  What can we Germans learn from the West Coast?  

Silicon Valley and German engineers complement each other. Our cooperation, for example with Google, showed us that it was good to work at different speeds within our company.  The products we supply for automobiles have to be 100 percent functional from day one - and continue to be so for many years. But a smartphone often has a product cycle time of only one year and needs a different speed of development.

You generate 40 percent of your revenues supplying the automotive sector. Where do you see future growth opportunities?

The new functions in autonomous vehicles will have a lot to do with driving: The car parks itself, avoids traffic jams and reaches its destination both more quickly and safely. At the same time, a great deal of data is generated, which manufacturers can evaluate for future development purposes – both for services and technologies.

How will you prevent customers feeling they are being spied on?  

By using the data obtained to offer better services. And it is all about the technologies: Radar sensors, for example, produce neutral, not personalized data.

Networked automobiles produce mountains of data in a matter of seconds. How can you prevent data failure? How can you even process such volumes?  

Many people speak of outsourcing intelligence to the cloud, but what is important is to make data available in the car within a microsecond. For this purpose, we are developing high-performance chips with the required computing capacity, so this is guaranteed in the system without a time-consuming detour via the cloud. The cloud will focus on increasingly higher quality analyses, for example, of weather data and collating traffic flows better.

Currently there is one takeover after another in the chip industry. You took over the U.S. specialist Wolfspeed, and its U.S. competitor Qualcomm swallowed its Dutch rival NXP Semiconductors. Is the wave of mergers set to continue?  

Yes, the semiconductor industry is not growing as rapidly today as it used to, so of course that sets the stage for a consolidation of the industry.

Could Infineon itself become a takeover target?

Acquisitions have to make sense. Buying just for the sake of it is no business model.

So, no takeover? There are supposed to be companies in the Far East interested in your company.  

We are very successful in Asia. And we want to play an active role ourselves in the consolidation of the industry. I think this message has been understood.

 

Britta Weddeling is a correspondent in the United States writing about the internet and digital economy from Silicon Valley. To contact the author: weddeling@handelsblatt.com

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