Fielding solutions, not parts

When I took the helm at the semiconductor division at Philips late last year, the "perfect storm" was already raging. We continue to navigate uncertain waters; though we have done our best, the perfect storm cannot be navigated perfectly. The technology sector in general is suffering, requiring change for survivability, and we have endured the most severe downturn in the history of the semiconductor industry.

Every company is making changes; every aspect of a business is under cost scrutiny, from R&D to manufacturing to market channels. Industry consolidation is always part of the discussion, even as new companies continue to spring up against all odds. Investments must be leveraged and partners are a key to any company's success.

I asked our team to look at every aspect of the business in order to continue to move forward in the wake of the storm.

For a start, our approach to partnering covers the whole value chain-from direct customers and distributors to industry peers that become partners. We recently extended a long-standing relationship with ST to include Motorola Inc. and Taiwan Semiconductor Manufacturing Co. on joint development of 0.09-micron process technology at a facility in Grenoble, France. We have also worked with TSMC for a number of years on manufacturing agreements. By leveraging our work together, customers of each company can benefit greatly.

At the customer level, we translated this into programs that are measured in "relationship capital." And getting closer to customers brings both parties benefits-from shared long-term road maps to better planning and forecasting. We actively partner with key customers in mobile wireless handsets based on our total-solution approach. We have partnered with key customers in digital entertainment based on our silicon-system expertise.

Higher levels of integration are a key to success. With it come other benefits, such as lower power consumption, higher speeds and smaller products. But we are really talking about a system mentality. Leading industry analysts agree that it is increasingly difficult to design a new IC that's both competitive and on time without reusing parts of earlier designs; in other words, reuse. At Philips, our Nexperia platform is developed specifically to this objective, combining hardware and software blocks of intellectual property developed in a reusable form. At the same time, we've seen our own software development teams grow from dozens to thousands of engineers, reflecting the change from delivering parts to delivering solutions. The complete portfolio makes for the complete partner.