SIIP China

Connectivity. Electrification. Shared Mobility. Autonomous Driving. McKinsey Company cites these four disruptive trends behind future mobility — dynamics that could help to transform quality of life for hundreds of millions of people.McKinsey Company predicts that by 2030, mobility innovation could dynamically alter everything from safety in human locomotion to air quality, public spaces and power systems. Much the same way that tiny plankton in our oceans sustain aquatic animals, MEMS and sensors, while small, are crucial building blocks of integrated mobility.As partner at McKinsey Company, Andreas Breiter will explore this connection during his MSEC 2020 presentation, Future Mobility Enabled by Sensorization. SEMI recently caught up with Breiter to preview his October 7 talk at SEMI’s first virtual MEMS Sensors Executive Congress, October 6-8 and 13-15, 2020.Register now for MSEC 2020 and explore this topic with Breiter during the live Q A portion of his presentation.SEMI: You play a dual role at McKinsey Company, advising clients in advanced industries on capital investments and serving on the leadership team of the McKinsey Center for Future Mobility (MCFM). What is the relationship between them?Breiter: Mobility has become so much more than the auto sector. Today when we say future mobility, we’re talking about the convergence of many exciting developments influencing the ways that people and goods move around. Cars have become computers, and we now have to contemplate new frontiers, such as air taxis and electric vehicle infrastructure.Mobility is changing so quickly that it’s inspiring decision-makers from other market sectors to explore what implications it will have for them. We’re helping mining companies think about their haulers, retailers think about their footprints, and insurance companies plan for autonomous vehicles. The MCFM exists as a global think tank to focus on these frontier topics, helping to ensure we are ready for the future. During my MSEC presentation, I’ll explore how those future topics are influencing automotive mobility in the short- and long-term. The MCFM is even more forward-looking, so we’re just starting to build scenarios for what might come in 2040 and beyond.SEMI: How are changes in the mobility ecosystem affecting the automotive value chain?Breiter: In the past, the automotive value chain was clearly structured. We had sensor companies selling to Tier 1 suppliers, who would in turn sell to OEMs, who would sell directly to end customers.The value chain has grown more complex, however. In the future, we might see fleets of robotaxis, which will be owned by companies instead of by individual consumers. Already today, rideshare companies are game-changers because consumers can travel by car without owning one.Plus we see companies offer parts of the user experience such as user interfaces for automotive infotainment. In the past, everything in the car was branded by the OEM, but now we have third-party platforms that let us control some of our automotive infotainment options.SEMI: How are MEMS and sensors suppliers participating in this new value chain?Breiter: The pervasive use of sensors in cars has driven automotive OEMs and Tier 1 suppliers to work directly with suppliers, whose close involvement eases the complexity of integration. Just think about the sensors used in autonomous driving. Getting that right is safety-critical.We’re also seeing suppliers go beyond the individual component level to provide complete systems-level solutions. Advanced driver-assistance systems (ADAS) are a good example.SEMI: Automotive applications tends to have some of the longest design-to-delivery cycles in industry. Will this ever change?Breiter: The automotive product lifecycle was typically five-plus years, with a few years of development before that and continued service after the end of the lifecycle. That gives MEMS and sensors suppliers a 10+ year timeline on one model.With so much innovation taking place, this slow cycle won’t work forever. Over-the-air (OTA) updates, for example, enable new features when they become ready for deployment. I expect we’ll see OTA updates from many end manufacturers in coming years. SEMI: What changes do you foresee in ADAS and autonomous driving?Breiter: ADAS and autonomous features will become much more common. We’ve already witnessed this progression, with introductions first in premier models and later rolling out in more affordable vehicles. Lane-change assist and rear camera followed this path and are now pretty standard. Collision avoidance, as a safety-critical feature, is likely next in line for more widespread adoption.As for fully autonomous driving, consumers will accept that only when it becomes safer than a human driving a car.SEMI: Where is the greatest opportunity in the next five years?Breiter: Electrification of vehicles is number one. When it comes to engines, we’re moving from internal combustion to hybrid and then to electric. Since OEMs are adding sensors for the battery system, for battery management, and for electric motors, this progression represents growth opportunity for sensors suppliers – in particular for hybrid vehicles that contain both powertrain technologies.But that’s not all when it comes to sensors. Outside of powertrains, new sensors are added to enable a variety of functions, including, for example, ADAS and autonomy, as well as increased interior content, such as mood lighting.SEMI: Is there anything surprising coming, sensor-wise, in mobility?Breiter: To enable intelligent traffic systems, you need to make infrastructure smarter — which brings us to sensors. We’re going to see roads and other assets in infrastructure sense the state of traffic, sense what traffic participants are doing, and support connectivity between, for example, the infrastructure, vehicles on the ground, pedestrians on walkways and drones in the air.SEMI: What would you like MSEC attendees to take away from your presentation?Breiter: We’re living in a transformative era for the mobility industry. During the last 100 years of mobility, the ecosystem barely changed. In recent years, however, we’ve seen massive technological gains, largely enabled by semiconductors, MEMS and sensors. Instead of serving as just one of many suppliers, I’d encourage MSEC attendees to anticipate future mobility challenges so they can offer solutions to OEMs and Tier 1 suppliers accordingly.For more information, visit McKinsey Center for Future Mobility. MEMS Sensors Industry Group® (MSIG), a SEMI technology community that connects the MEMS and sensors supply network in established and emerging markets, enables members to grow and prosper. Visit us today.Andreas Breiter leads McKinsey’s capital-investment work for advanced industries in North America as well as its Center for Future Mobility on the West Coast. In his advisory work, Breiter serves a broad range of companies in the automotive sector, including car and truck manufacturers and their suppliers, as well as companies in the utilities and renewables space. He helps executives make strategic choices around product development and helps companies stay ahead of emerging trends, such as autonomous driving, connectivity, electric vehicles, and shared mobility.Andreas holds a Ph.D. in Operations Management and studied in Germany, France, the U.S. and Canada.Nishita Rao is product marketing manager at SEMI.

Kyushu, the third largest island in Japan, is home to the semiconductor production bases of integrated device manufacturers (IDMs) with world-class cutting-edge technology. SONY, Toshiba, Hitachi, Mitsubishi, Fujitsu and Nissan are among the sector’s shining stars, though a host of other IDMs tied to the supply chains of other major enterprises have also set root in Kyushu. Collectively, the companies earned Kyushu the name Silicon Island of Japan.Kyushu’s flourishing IDM industry sprouted from favorable tax and other government policies that reduced semiconductor production costs to levels lower than elsewhere in Japan. Once the IC producers had established bases, equipment and materials companies naturally followed, leading to the influx of many parts manufacturers. Together, they came to Kyushu, one after another, to make the island a magnet for manufacturing. And so it was to Kyushu that a SEMI China delegation travelled for a meeting at TEL’s factory in Kumamoto to learn more about the secrets to the rapid growth of the island’s semiconductor industry and promote cooperation between Chinese and Japanese enterprises. Underscoring the rise of the Silicon Island of Japan, China will soon become TEL’s largest market, said Masami Akimoto, Chairman of Tokyo Electron Kyushu Limited, speaking at the event. Masami Akimoto hopes for support from SEMI China.The island of 12 million people contributes to the growth of the global semiconductor industry, expected to reach USD 500 billion in size in 2019 as China’s semiconductor sector, fueled in part by government-backed investment funds, continues its rapid expansion. Despite the gains, China still lags other regions in advanced manufacturing, said Lung Chu, president of SEMI China, which is doing its part to draw more advanced manufacturing to the region through its SIIP platform. The initiative encourages pan-regional cooperation with China’s semiconductor industry to promote free trade, open markets, technology innovation and IP protection – all to help China better integrate with the global semiconductor industry. SEMI China President Lung Chu(L) issues visit memorial to Masami Akimoto(R), Chairman of Tokyo Electron Kyushu Limited. Chicken shall be led by the HenUnlike other regions with comprehensive semiconductor industries, Kyushu’s is primarily focused on production and assembly, with more than 200 manufacturers of semiconductor equipment and parts.SEMI China Delegation at Tokyo Electron Kyushu LimitedTEL built its first factory in Kumamoto, a city covered by volcanic ash in the center of Kyushu, 34 years ago. Today, TEL every month produces 80 to 90 sets of equipment, each consisting of, on average, over 400 thousand parts that must be certified and authorized by TEL before delivery to its module manufacturers and assembly into complete machines. Having blossomed over the past few decades, the island’s supply chain now supplies TEL with all its equipment parts. SEMI China Delegation at Fajita WorksTEL supplier Fajita Works, a high-precision plate metal manufacturer founded in 1945, is emblematic of other companies in the Kyushu supply chain. It keeps a low public profile as it serves several longtime customers and earns ardent loyalty from its workers, an ethos reflected in the change next January of its slog from “Only One” to “Great company, Great life.”Quality is the life of the enterpriseLong before the rise of its legendary automobile and consumer electronics companies, Japan was known for inferior, counterfeited products, labeled “Made In USA” and shipped to the United States by more than 100 factories. The net effect was to shrink and commoditize American markets. The tide in Japan’s product quality and stained reputation began to turn in the 1980s, when Japan’s semiconductor industry began to produce memory with an error rate 27 times lower than its U.S. competitors, giving Japan an upper hand in quality that it would never relinquish. SEMI China Delegation at HORIBAKyushu-based flowmeter supplier HORIBA, among the many Japanese companies famous for their product quality, ships 38 percent of its products into the automotive market and 27 percent into the semiconductor sector. Cleanliness is as vital a part of the company’s culture as quality. Each depends on the other, with fine detail held to the highest importance. On its visit to HORIBA, the SEMI China delegation, passing by an office area before entering the factory, sighed at the sight of the spotless, neatly kept furniture and workspace: They had never seen an office so sparkling clean. HORIBA’s success is rooted in immaculate offices, factories and the company’s motto “Enjoy innovation and pay close attention to product quality.”After Kumamoto sustained heavy damage during a 2016 earthquake, HORIBA workers returned rocks scattered by temblor to their original position, knowing that order is critical to lean, efficient manufacturing and that, indeed, “the devil is in the details.” SEMI China Delegation in Kumamoto City Full confidence in the exploration of Chinese marketConsumer electronics stalwarts Sony and Panasonic feature semiconductor factories in Kagoshima, the southernmost city in Kyushu and Japan, though rumor had it two years ago that Panasonic planned to pull out. The Panasonic plant, which provides batteries for Tesla, remains. The Sony facility produces image sensors for the iPhone.Semiconductor equipment maker ULVAC, SEMI China’s most important strategic partner, is also based in Kagoshima. During the delegation’s visit to the company, Lung Chu noted that while China is the world’s largest semiconductor market, the region meets just 13 percent of domestic chip demand. Stressing that ULVAC can play a crucial role in helping China become a bigger player, he expressed admiration for ULVAC’s professionalism along with hope that it will maintain its rapid growth and leverage SEMI resources to catalyze rapid development of Internet of Things (IoT), artificial intelligence (AI), and 5G technologies in China and rise into the top 10 of global equipment manufacturers. SEMI China President Lung Chu (L) issues visit memorial to ULVAC Kyushu President and CEO Kenji Yamaguchi ULVAC Kyushu president and CEO Kenji Yamaguchi made clear the company’s interest in Lung Chu’s insights into Chinese semiconductor industry while underscoring its core competency of producing semiconductors for flat panel displays. The Kyushu Factory of ULVAC is full of vitality and market competitiveness. SEMI China Delegation at ULVAC EBARA, a precision machinery company located in Kumamoto, has manufactured chemical-mechanical planarization (CMP) equipment for over 20 years and delivered nearly 2,400 mechanical polishing machines worldwide. While the company expects to ship 50 sets per year to China starting next year, it has the capacity to deliver 20 sets per month, enough to meet demand of Chinese semiconductor makers. SEMI China Delegation at EBARAThe most telling takeaway from the SEMI China delegation’s visit to the Kyushu: Japan ranks number one worldwide in research and development (R D) investment as a proportion of GDP and is also at the top in the percentage of R D funds controlled by private enterprises. The outsize investment strategy has enabled Japan to maintain its hold as one of the world’s top technology innovators.Like Sakurajima, the famed Kyushu volcano, the SEMI China delegation will continue to harness its forces to build relationships with the island’s semiconductor supply chain as it works to develop win-win pan-regional relationships and foster the growth of China’s semiconductor industry. Best view of Sakurai volcano Gang Yao is a marketing director at SEMI China.