Semiconductor industry ‘back to normal’

All participants agreed that the semiconductor industry was a victim of circumstances, rather than – as it has been in the past – a victim of its own profligacy. Peter Bauer, Infineon's ceo, said: "In 2001, it was about making products for which there was no demand. This time, demand was there, but the financial crisis intervened." Carlo Bozzotti, STMicroelectronics' ceo agreed: "It was driven externally by a lack of good governance in the financial world. They created bubbles which then collapsed. But it was very difficult to predict." NXP's ceo Rick Clemmer gave an example. "Demand from the automotive industry dropped by 50% in the first quarter of 2009 and there was no way to plan for that and the implications for the supply chain were significant." Henri Richard, pictured, senior vp with Freescale, said that, despite the problems, the industry hadn't stopped investing. "We are a on treadmill that never stops. We didn't touch our R&D expenditure, but we did take a hard look at our portfolio and that is paying off." But he pointed to a potential mismatch. "We thrive on innovation, but people want stability. We need to be as fast as possible and build relationships with customers." But all four participants agree the industry has rebounded. In fact, Clemmer believes there will be a 'normal seasonal decline' in Q4. "And 2011 will be a typical year. Most shortages will have gone, except for a few pockets, and things will be back to normal by early next year." Richard is excited about the future. "There will be a generation of people in a couple of years who haven't lived without the internet starting to spend money and they will be powerful demand generators."