While Asian semiconductor wafer contractors -- foundries, as they are better known -- typically garner more attention, two German companies are stirring up serious interest.
With their efforts focused on the fast-growing power management market, X-FAB Semiconductor Foundries AG and LFoundry GmbH are securing a niche as suppliers of analog and mixed-signal semiconductors, notes Len Jelinek, iSuppli Corp. 's director and chief analyst for semiconductor manufacturing, in a recent report.
Additionally, targeted growth strategies -- centered on the expansion of manufacturing operations through timely acquisitions of existing wafer fabs previously facing financial difficulties -- have proven to be an advantage over Asian counterparts, which continue to engage in capital spending wars, according to Jelinek.
Financially, both operations show promise. Despite seeing revenues drop from $369 million in 2008 to $210 million in 2009 as the recession took its toll, privately held X-FAB is expected by iSuppli to rebound and book $315 million this year. LFoundry, which spun off from Renesas Technology Corp. in 2008, had only $33 million in revenues in 2009, its first full year of business. But its recent acquisition of the Atmel Corp. (Nasdaq: ATML) manufacturing facility in Rousset, France, should peg 2010 revenues at $200 million, iSuppli predicts.
How well these companies ultimately fare will depend largely on how they manage their growth as the electronics sector recovers, and how easily they ward off challenges from Asian competitors looking to increase their European presence. Jelinek also alludes to the importance of forging relationships with emerging design companies in Asia, which undeniably will be an important key to meeting shifting global demand.
As far as the global electronics supply chain goes, I wonder what role European contract manufacturers and foundries will play in the next couple of years as the economy and consumer end-markets gain momentum. Every few years, the winds seem to change direction: Sometimes chipmakers and OEMs go the lower-cost route, and at other times they opt to keep manufacturing partners closer to the markets they intend to serve.
Which way are the winds currently blowing? Will the region’s proximity to the developing markets of Russia, the Middle East, and Africa trump lower-cost Asian production? Let me know what you are picking up from the grapevine.
Hi Jenn, interesting article.I could see a steady stream of revenue for the local niche players in Europe for the foreseeable future, but I am not sure I see stellar performance.I still see Asia as the giant for some time to come.We always hear about China, which of course is the current leader in this space, but I wouldn’t be surprised to see India become a major player, if they could get their infrastructure up to speed.India’s foundry business is experiencing a revival mainly due to the automotive industry and the high demand for cars in the region, despite the downturn in the world economy.Would be interesting to see how it plays out over the next few years.
My feeling is that the proximity of these facilities to the Fast growing markets of Africa,Middle East and Eastern Europe mean that they do have a major advantage over Asian foundries.Especially as Shipping costs and delays rise considerably(thanks to Increased checks on account of bomb threats as well as due to weather problems).
Proximity to markets is a major advantage(especially if they manage to keep their products cost-competitive with Asian Suppliers).
Thanks for the post. True, India will be a country to watch for many reasons, including the ones you mention. I think their ability and effectiveness in pulling off production for the region's growing low-cost car segment will be something device makers will want to keep tabs on. That, combined with their relatively strong software development background and customer service call center niche may make for an interesting all-services outsourcing locale.
Thanks for the post. I agree that shipping costs are a huge expensive that has to be considered in the total cost picture. Like you said, supply chain disruptions (whether caused by weather, terorism-linked customs delays, transportation/infrastructure issues, or any number of other issues) will continue to occur in some way, shape or form, regardless of the all the steps taken to prevent them. It seems like this costs vs promixity debate will be with us for quite some time, and companies will still have to weigh the pros and cons of each.
A new report shows that most of the worrisome issues that the supply chain industry has been dealing with for years are not new, but there are some new concerns that need answers. Here’s a look at what keeps supply chain professionals up at night.
When it comes to shipping supplies from China to Europe, trains might be the most cost-effective way companies have available to them. DHL is looking to jump on that bandwagon.
For many dealing with the enormous task of tracking,
reporting, and resolving issues associated with
potential counterfeit parts, there is a collective
hope that 2013 will bring clearer guidance on what
needs to be done by whom and when.
A necessary foundation for moving efficiently at real-time speed, supply chain analytics is still very much at the beginning stages of development at many companies.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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