Cost of engineering is only one consideration, says Infineon CEO

Dylan McGrath, EE Times
(05/16/2006 2:28 PM EDT)

SAN FRANCISCO — There are those who believe that the vast majority of semiconductor design work will be done in the not-so-distant future in China, India and other emerging nations. But that's not the case, according to Wolfgang Ziebart, president and CEO on Infineon Technologies AG CEO, who said in an exclusive interview with EE Times that the need for the innovation that springs from working in close proximity to customers far and away outweighs the benefit of reduced labor costs.

During the recent interview, Ziebart said there are a number of factors to take into account when considering the location of a design team. Cost, he said, is only one factor, and not the most important.

"You have to have a strong presence where the elite customers are," Ziebart said, adding that innovation most often occurs when customers and designers meet regularly to work together on a design. "That is how innovation works," he said. "Innovation does not happen from a customers sending out a specification and a vendor giving them a quote."

Maintaining design centers in remote locations where engineering talent is less expensive, such as rural areas and emerging nations, makes sense only for relatively established parts that don't require much innovation, Ziebart said. In those cases, companies can derive a significant benefit from having them designed in areas where engineering costs are lower, Ziebart said.

Infineon's XC800 family of 8-bit microcontrollers, introduced in 2005, is a case in point. This family of industry standard 8051 architecture-based products, which was designed at the company's design center in Xi'an, China, includes a whooping 40 derivatives.

"That would have been impossible to do with the cost structure in Germany and the United States," Ziebart said.

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