Wescon2003Wong

Slide1: 

Alvin K. Wong V.P. – Marketing, Infineon, North America alvin.wong@infineon.com

One of Fastest Growing Semiconductor Solutions Providers: 

One of Fastest Growing Semiconductor Solutions Providers

Slide3: 

A World Leader in Semiconductor Solutions FY 2002 revenues of 5.1 billion US dollars Top 1 - 3 position in all target markets Over 30,000 employees worldwide Over 30,000 patents and numerous R&D locations on 3 continents Leadership expertise in automotive, communications, computing and security applications Most advanced fab cluster and world leader in 300mm production

Infineon – Market – Oriented Business Structure: 

Infineon – Market – Oriented Business Structure Applications Business Groups Broadband and Carrier Access, high speed line cards for metro and long-haul optical networks Customers PC and notebooks, PC-upgrades, workstations, infrastructure (servers and networking), PDA's, SMART phones, computer peripherals Secure mobile applications and systems: communication, payment, identification, computing, entertainment, wide area wireless and local area wireless networks, personal area wireless networks, GPS Car Electronics (powertrain, comfort management, safety management, infotainment), Power Conversion (power supplies, drives) Automotive & Industrial Wireline Communication Secure Mobile Solutions Memory Products

Presentation Agenda: 

Presentation Agenda A. Strategic Inflection Point B. Convergence C. Challenges

Slide6: 

“Sooner or later, something fundamental in your business world will change." -Andrew S. Grove Former Intel CEO Author of “Only the Paranoid Survive”

The Inflection Curve: 

The Inflection Curve Inflection Point Business goes to new heights Business Declines Inflection Point: Time in the life of business when its fundamentals are about to change. Change can mean an opportunity to rise to new heights. It may just as likely signal the beginning of the end.

The Old Vertical Computer Industry – Circa 1980: 

The Old Vertical Computer Industry – Circa 1980 Chips Computer Operating System Application Software Sales & Distribution IBM DEC Sperry Univac Wang

The New Horizontal Computer Industry – Circa 1995: 

The New Horizontal Computer Industry – Circa 1995

The Inflection Curve: Timeline for Computer Industry: 

The Inflection Curve: Timeline for Computer Industry Inflection Point Business goes to new heights Business Declines

Rules to Follow in a Horizontal Industry: 

Rules to Follow in a Horizontal Industry Horizontal Industries live and die by mass production and mass marketing Rules for a Hypercompetitive horizontal world… 1. Don’t differentiate without a difference Don’t introduce improvements whose only purpose is to give you an advantage over your competitor without giving your customer a substantial advantage 2. Opportunity knocks when a technology breakthrough change occurs…Grab it. Only the first mover has a true opportunity to gain time over its competitors and is the surest way to gain market share 3. Price for what the market will bear Price for volume, then work on your cost so you can make money at that price

Vertical vs. Horizontal Industry: 

Vertical vs. Horizontal Industry By virtue of the functional specialization that prevails, horizontal industries tend to be more cost-effective than their vertical equivalents. It’s harder to be the best of class in several fields than in just one. As industries shift from the vertical to the horizontal model, each participant will have to work its way through a strategic inflection point.

The Old Vertical Cell Phone Industry – Circa 1990: 

The Old Vertical Cell Phone Industry – Circa 1990

The New Horizontal Cell Phone Industry – Circa 2000: 

The New Horizontal Cell Phone Industry – Circa 2000

Cell Phone Market Share: 1994 vs. 2002: 

Cell Phone Market Share: 1994 vs. 2002 Source: Gartner Dataquest, March 6, 2003

New Players Entering and Changing the Fundamental Model: 

New Players Entering and Changing the Fundamental Model

ODM’s Projected Handset Forecast: Worldwide: 

ODM’s Projected Handset Forecast: Worldwide Source: Goldman Sachs Communications Technology June 23, 2003 In Millions of Units From 7% share in 2002 to 18% share in 2005

Branding will be a Key Element Between Cell Phone Manf. and Carriers: 

Branding will be a Key Element Between Cell Phone Manf. and Carriers

What Can Accelerate the Inflection Point Slope?: 

What Can Accelerate the Inflection Point Slope? Inflection Point Business goes to new heights Business Declines Inflection Point: Time in the life of business when its fundamentals are about to change. Change can mean an opportunity to rise to new heights. It may just as likely signal the beginning of the end.

Presentation Agenda: 

Presentation Agenda A. Strategic Inflection Point B. Convergence C. Challenges

Convergence Boom!: 

Convergence Boom! Inflection Point Business goes to new heights Business Declines Inflection Point: Time in the life of business when its fundamentals are about to change. Change can mean an opportunity to rise to new heights. It may just as likely signal the beginning of the end. Convergence Boom!!

Infineon’s “3C” View : 

Infineon’s “3C” View Computing Communications Gaming Video/music download Messaging Local-based services mCommerce eBilling Data Video/TV Consuming

Growth Dynamics of Mainstream Electronic Devices : 

Growth Dynamics of Mainstream Electronic Devices 0 50 100 150 200 250 300 350 400 450 1990 1992 1994 1996 1998 2000 2002 Year Units sold per year [mill.] Colour TVs PCs Mobile Phones PDAs Source: Gartner Dataquest

The “Convergence” Inflection Curve: 

The “Convergence” Inflection Curve Convergence Inflection Point Business goes to new heights Business Declines “Convergence” Inflection Point: Time in the life of business when its fundamentals are about to change for more than one market segment.

Convergence Boom : 

Convergence Boom Infineon Vision To create Semiconductor Solutions, enabling the Technology Lifestyle of the Individual in the 21st Century The Intel Mobility Vision We see it coming: a naturally mobile lifestyle at the point where computing and communications converge. Behind it, we see you. Working with optimized technology. Using standardized building blocks to speed development. Creating a mobilized world where people connect anytime, anywhere. Ron Smith, Sr. VP, at 3GSM World Congress 2003, February, Cannes, France “We envision a future in which every piece of silicon inside PCs, PDAs, cell phones or other electronic devices will include computing technologies but also connect to multiple wireless networks and roam between them.” Pat Gelsinger, at the Intel Developer Forum,February 2003, San Jose, CA.

Convergence Boom: 

Convergence Boom The Convergence Boom is needed to make a seamless network Standardized Network Solutions will drive the adaptation New standards are emerging: i.e. Zigbee, UWB, Roaming will be achieved and intelligent devices will be able to identify one another without user interaction “Unconscious Computing”-will change the way we interact with our environment Our lifestyle will definitely change the way we work, play etc.

Presentation Agenda: 

Presentation Agenda A. Strategic Inflection Point B. Convergence C. Challenges

Semiconductor Supplier Challenges: 

Semiconductor Supplier Challenges Challenges Standardization of Interfaces GSM, BT, WLAN are complex technologies Need for a common interface language…for modular “plug and play” Technology performance may decline Technology know-how for multiple standards System Architecture Hardware Integration Software Development Partnerships, Acquisitions and Alliances

Computer Segment Challenges: 

Computer Segment Challenges Challenges Differentiation Bundling Total Consumer Solutions (HP, Gateway) Next step is Wireless “We anticipate notebooks will be the fastest growing PC market, with 9% unit growth (versus desktop units at +2% and PC Servers at +8%)… Morgan Stanley July 1, 2003

Market Indicators That Economy is Improving: 

Market Indicators That Economy is Improving Venture Capital Investment rebounded in Q2 2003, reaching $4Billion USD…an 14% increase compared to Q1 2003. Ernst & Young/VentureOne US “The second consecutive quarter of expansion in silicon consumption clearly indicates we are entering a new growth cycle following the worst downturn in the semiconductor industry,” said Volker Braetsch, Vice President Strategic Planning and Communication, Wacker Siltronic. Peter Clarke, Semiconductor Business News, 8/12/2003 Worldwide PC unit shipments grew 10% in second quarter of 2003…first double digit growth year-over-year increase since the third quarter of 2000. Gartner Dataquest, July 17, 2003 However, we still need to be smart about making money

Summary: 

Summary The Technology Industry is in a “Convergence” Inflection Point Innovation will continue to be the fuel and differentiator Technology Creating a Seamless Network requires Standardization of Interfaces Modular Technologies to be plug and play Business Models Companies must position themselves strategically to win in the convergence market…partnerships, acquisitions, and alliances will be key Improving the Operational Efficiency

Outlook: 

Outlook Many players (and new ones) will be involved to make it happen Many existing players will fall out due to the competition The expertise around the world is required to make the Convergence a reality Industry Leaders need to lead the charge! The DotCom Boom was a “false” start, the real race is about to begin!!

Slide33: 

www.infineon.com