EE Times Europe: Mr. De Winter, X-Fab recently has a dual leadership, with you being responsible for R&D, marketing and sales, and long-standing CEO Hans Juergen Straub for finance, HR and operations. This looks like in the long term you are intended to replace Mr. Straub. Does the move initiate a generational succession?

Rudi De Winter: No. Perhaps not many companies have two CEOs, but I've worked before at Melexis which also was running with two CEOs - and that worked very well. Actually, X-Fab has great plans to further grow the company.

For a pure-play foundry, economies of scale are very important. That means that there needs to be worked at several fields – on one end to grow through acquisitions and strategic plans and on the other hand make sure that the ongoing business - with proprietary technologies and what we refer to at X-Fab as COT, Customer-owned tooling – grows accordingly. Economies of scale demand that wafer fabs get bigger and bigger - that's why it makes a lot of sense to work in team and to split responsibilities.

EE Times Europe: With you being responsible now for R&D and sales, what will change at X-Fab?

De Winter: The strategy at X-Fab will not change. An important focus will remain on COT business, so we invest in innovative technologies to remain on the leading edge with respect to SoCs, integration with high voltage, sensors, embedded Flash etc in monolithic solutions. On the other hand we also offer proprietary processes - we prefer to say customer processes - for the high volume consumer customers to really have optimized processes for specific products.

EE Times Europe: In recent foundry rankings, X-Fab made a big jump ahead - ranking number twelve globally now, up from rank 15. Among pure-play foundries, X-Fab even ranks number nine now. Is this solely a result of the acquisition of ZMDs manufacturing activities in 2007?

De Winter: The semiconductor market is quite dynamic, so the additional business [through the acquisition] helps us to move forward. Another reason was our capacity expansion through the formal acquisition of 1st silicon in Malaysia. At this large facility, we are converting the product portfolio from "More Moore" to "More than Moore".

This process takes a couple of years. The technologies are there, but growing the business with our customers takes some time. "More than Moore" is a market with some inertia; the designs take some time to get mature, to get into volume production. But once in volume production they have a much longer product lifetime. Thus, it is a significant step for us to switch from pure digital-based products to the More than Moore technologies.

EE Times Europe: Until recently, utilization in the semiconductor industry went through the roof, customers complained about lead times. Has the situation improved now?

De Winter: After the downturn there has been a strong raise because people started buying products again. Stocks were empty across the entire supply chain; it was like rebooting the industry. This situation caused some hiccups in the supply chain. Since end of Q3 2010, this has stabilized in my view. There are enough products in the market; maybe there is a small undershoot now. We are going now into more stabilization for the rest of 2011. In comparison to 2010 we expect a somewhat softer market - there are still excessive overstocks or somewhat high stock levels in the supply chain - into a more normalized situation for the rest of 2011.

EE Times Europe: X-Fab is selling to a large extent to the automotive and medical electronics industry where high quality requirements and the need for certification of the products have a retarding effect to technology changes. At the same time, consumer devices are entering automotive environments and call for quicker movements in the automotive industry supply chain. To which extent does this situation affect X-Fab?

De Winter: Yes, at X-Fab about 40 percent of our products go into cars; among the pure-play foundries we are probably the one with the most pronounced focus on this market. Serving the automotive industry requires a certain organization to meet the quality requirements and the reliability in the field. Certainly, there is an additional market opening up for infotainment in the car. But while it is nice to have all these gadgets in the car, the end user expects a different level of reliability as soon as this functionality is integrated into the car as opposed to when these devices are used stand alone. A phone typically is thrown away after a year or two, but a car is used for 15 or even 20 years.

EE Times Europe: In the semiconductor industry, the mainstream moves quickly towards smaller geometries. To which extent a specialty fab like X-Fab has to follow this trend?

De Winter: We do follow this trend with a time lag of several technology generations. Also the analog and More than Moore technologies have evolved from one micron 15 years ago to 0.18 micron today. The roadmap will go further to 90 nanometers in the next five years. We also invest a lot in our design kits by permanently improving the accuracy of the models and creating a richer portfolio of IP blocks to allow increasing the productivity of our customers.

EE Times Europe: Industry watchers say that X-Fab runs the risk of losing its focus. Recently X-Fab has opened up another technology front by acquiring a stake in MEMS fab MFI. How does this move fit into your focus?

De Winter: It perfectly fits into our More than Moore strategy, because sensors and micro-actuators are part of the analog world. They will be further integrated and combined with CMOS intelligence to make micro-actuators intelligent. For this reason, our engagement with MFI is a natural move and a logical step for an analog foundry. Technology-wise it is of course a challenge because these technologies are not the same as CMOS. That's why through the cooperation with MFI and the proximity to Fraunhofer Institute we can leverage to develop those technologies.

EE Times Europe: Despite high demand, X-Fab lost money in the first nine months of 2010. How can one lose money in a landscape that was the best of all possible worlds for the semiconductor industry?

De Winter: One important and quite large activity is our wafer fab in Malaysia where we are about to convert the technology mix from the digital and memory market into More than Moore products. This process is still ongoing. The crisis caused some delay there - some companies stopped or lowered their innovation pace and new product designs in 2009. But now everything is moving forward well and we are confident that this is becoming a very modern and productive site.

EE Times Europe: When will X-Fab return to profitability?

De Winter: X-Fab in fact is financially quite healthy. For the full year 2010, X-Fab records a positive net profit despite a negative operational result. We expect to become operational profitable by 4Q2011.