DRESDEN, Germany With fab utilization running high, German chip maker ZMD AG said its analog strategy should innoculate it against market vagaries and Asian competition.
Earlier in the week (March 30), ZMD opened a new 17 million euro facility that will employ hundreds of new developer jobs. After AMD and Infineon, the Saxon chip maker is the third largest IC maker in the region.
ZMD Chairman Thilo von Selchow said the company currently employs 750 workers in in Germany, the U.S. and Asia. He said the company wants to boost sales by 10 percent this year as it did in 2003.
The utilization of semiconductor production is "in fact more than 100 percent," said von Selchow. "We do not suffer from a lack of demand, but rather have the problem that we need to build sufficient plants to keep pace with the growth. Our order books are filled, and that won't change for the next two years."
During the next five years, ZMD plans to invest about 100 million euros in manufacturing, with 75 percent for production and the rest for new EDA software.
The company's recipe for success is a focus on analog and mixed-signal niche markets. "Analog know-how is not as common as digital expertise only the U.S. and some European countries are able to play in this arena."
There is currently little analog expertise in Asia, von Selchow said. "You need a lot of experience for analog production, and you cannot squeeze analog circuits into software easily. That means it is quite simple to gain a unique sales advantage," von Selchow explained. As a result, Asian competitors don't benefit from the cost advantages.
Another advantage of analog markets compared to digital techniques is different innovation and investment cycles. "Normally, we have a product lifetime of more than five years, while for example in the PC market a chip will only be manufactured for a year." That translates into sustainable growth.
One third of the ZMD fab's products target automotive engineering while the rest are evenly divided between industrial automation and medical technology. The medical, or "personal diagnostic" area, includes mostly portable devices. The portfolio consists of chips for electronic thermometers and blood pressure meters. "These are real mass markets with high volume needs," said von Selchow.
To safeguard its future, the company is tightening its focus on wireless networking techniques for home markets and industrial applications. One of ZMD's home automation projects has already reached an advanced development stage: a 900-MHz transceiver for wireless connections of fire alarms and heating thermostats, for example.
"Actually, sensor networks have such a great potential, it's like a developer's paradise," says von Selchow, full of enthusiasm.
One example is the production of monitoring devices using sensor chips that respond to ambient changes in temperature, pressure or gasses. The sensors are coupled with RF elements and arrange in self-organizing networks. "You could use such sensors for agriculture purposes, for example, measuring the humidity of corn to determine the ideal time for cutting the corn," the manager outlined a field that so far has not been examined largely by the electronics industry.
"Even if you tend toward conservative forecasts, you have to admit that the next ten years will deliver a growth market with enormous potential," von Selchow said.
A combination temperature sensor-RFID tag could also be a winner. Integrated within a label, the chip could be applied to a container and allow automated monitoring. "We are able to deliver a chip like this within only a few weeks," von Selchow said.
ZMD is seen as being well positioned to take advantage of future business opportunities in the wireless market, for electronic car control. The company produces ASICs and ASSPs in quantities up to 10 million, according to von Selchow. Recently, ZMD managed to displace competitor Bosch at gear manufacturer ZF (Friedrichshafen, Germany), a coup for the company since Bosch holds 20 percent of ZF's business.
Another ongoing ZMD project for the automotive market is a 24-MHz radar sensor that transfers 3D images of its environment. Such a sensor could be used for applications such as blind-spot detection or to identify passengers. With the information provided by the chip, the on-board computer knows if a certain car seat is occupied by an adult, a child or is empty and whether to deploy an airbag in an accident.