Interview: From Global to Local to Profitable
Manufacturers face unprecedented challenges, including the global pandemic, increasing customer expectations, supply chain disruptions, and geopolitical risks. To address these pressing issues and promote digital transformation, the Smart Industry Network Netherlands (SINN) was established. As a collaborative effort between Capgemini, Equinix, Microsoft and Flevum, the network aims to promote digital transformation and resilience within the industry by focusing on local supply chains, sustainability, talent management, and innovation.
On the 14th of September, 2023, Flevum and its partners organised a knowledge-sharing session as part of the SINN program at the High Tech Campus in Eindhoven. Keynote speakers at the event were NXP leaders Linda Lengowski, VP of Corporate Strategy, and Maurice Geraets, Executive Director.
NXP Semiconductors is a global semiconductor company specialising in creating solutions that foster secure connections for a smarter world. The company develops semiconductor-based products and services, including IoT, automotive, and industrial solutions, creating breakthrough technologies that make the connected world better, safer, and more secure. NXP operates in 30 countries and has over 34,500 employees, 11,500 of which are R&D Engineers.
After the event, we sat down with Maurice for an in-depth interview on the challenges global operating companies currently face, and how NXP addresses them.
From Global to Local to Profitable
“We are living in a time that is both challenging and interesting. The geopolitical, economic, and environmental state of the world around us is creating both challenges and opportunities”, Maurice starts off.
After years of globalisation and moving production facilities to regions like Asia, we are now at a turning point. Companies and governments are looking for ways to localise technological and industrial capabilities. The semiconductor industry is one of those sectors in which the European Union wants to reduce import dependency. Producing semiconductors and other technologically advanced products on the European mainland increases supply chain resilience and fosters innovation within the continent. Moving the production of chips to Europe is, however, a significant challenge.
“Production facilities for semiconductors require billions of euros in investments, which makes it hard for any semiconductor company to build new production facilities on the European continent. That is why we decided to join forces with our competitors to jointly build a new production facility in Germany. The construction of this new and significant semiconductor foundry will add much-needed innovation and capacity for the range of silicon required to supply the sharply increasing digitalisation and electrification of the automotive and industrial sectors,” Maurice explains.
The new facility fits perfectly with NXP’s long-term strategy of being a market leader in specific sectors. According to Maurice, focus is critical. NXP focuses on market segments where they are or can become a market leader, with at least 1.5 times the market share of their closest competitor. While this strategy gives the company a clear focus, it also creates a significant challenge. NXP needs to identify new products, services, and markets where
they can grow into market leadership. Research and Development (R&D) is essential to be successful in this regard, and it is vital to invest in researching and developing the right technology. It also means focusing R&D more on developing sectors, like radar technology, and less on established technologies like FM radio chips.
Finding the Right Talent to Support Growth
“Research and development is one of our key differentiators in the market. Our R&D teams improve existing technologies and invent new ones that can change complete industries. Many people don’t realise how many different chips there are in the products they use daily. The average car has 1000 chips, and a Porsche Taycan has 8000, for example.”
To keep improving and innovating, NXP employs over 11,500 engineers: a number that keeps growing. Finding the right talent is another big challenge for the industry. The number of new engineers leaving universities is limited, and the competition between leading tech companies looking for talented engineers is fierce.
“Our entrepreneurial and innovative culture creates an environment where our engineers can thrive. I’m proud of the rising number of female engineers working at NXP. We have committed to reaching by 2025 a percentage of 25% when it comes to women team members in R&D and 20% in executive positions. For your reference, The current average for women STEM (Science, Technology, Engineering and Mathematics) graduates in the EU is only around 35%—this goal is more ambitious than many may think”, Maurice adds.
Because of the global nature of NXP’s operations, workforce challenges are global in nature as well. Looking at NXP’s operations, the challenges are diversity and a talent shortage. In other regions, workforce-related challenges have more of an external nature. Maurice explains:
“From a social responsibility perspective, we are not only responsible for our own employees. We are also responsible for the safety and well-being of employees at our suppliers. 55% of our chips are manufactured in third-party foundries. We must ensure that our full supply chain is free of human exploitation. This means closely monitoring our suppliers, being actively involved when our suppliers recruit for our production, and auditing production facilities to ensure full compliance with our anti-modern-slavery policies.”
NXP is fully aware of its impact from a social and environmental perspective, two of the three key components of ESG. ESG stands for Environmental, Social, and Governance and is front and centre at NXP. Maurice Continues. “We are by nature an enabler that improves ESG in other industries as well by creating intelligent products, services, and operations that are pivotal to reach ESG Goals.”
Creating a Greener World Together
“In the same way we ensure our overseas partners create a safe and secure environment for the employees working on our products, we also work with them on improving their carbon footprint. We make sure sustainability has its full attention. We set targets, audit their operations, work closely together, and help them improve. At the same time, they help us improve as well”
Creating a net-zero supply chain is easier said than done, especially in an industry that relies heavily on energy, gasses, and water in its production processes. Renewable energy is one of the first possibilities that comes to mind. The challenge for the delicate production processes used in the semiconductor industry is that the flow of electricity must be uninterrupted. Even a 200-millisecond drop in power can cause a whole production facility to grind to a halt.
“Our overseas production partners work in regions with electric grids that are far less stable than ours in Europe. To cope with that, they developed a digital rotating UPS. It ensures a constant flow of power, even when there is a drop in the current from the power grid. This solution will enable us to guarantee our production in Nijmegen continues to run without interruptions, even when Europe will move to the use of 100% renewable energy. If we want to reduce the global carbon footprint, we must work together, suppliers, partners, and competitors.”
Sustainability by Design
Sustainability is an important part of NXP’s strategy. They not only contribute by bringing down their own carbon footprint, but they also design and produce chips that have a huge positive impact on the sustainability of the companies buying and implementing them.
“Our products help drive down carbon emissions. An excellent example is our battery management chips. Our innovative approach will enable companies to use smaller batteries while getting the same output or more driving range without increasing battery size. Our chips will significantly increase the range of the trucks without the need for more batteries. This increases the position of electric trucks as viable alternatives for diesel trucks. We design for sustainability.”
Maurice continues: “Whether you look at sustainability from a social or an environmental perspective, I see a positive loop that starts at customer expectations. They are demanding sustainable solutions. Governments, in turn, are demanding greater transparency and better reporting. Investors are the same. They expect sustainable results, not only from a financial perspective but also from an environmental and social perspective. The more we transform into a purpose-driven organisation, the more talent we attract and retain. This improves our solutions’ quality, solidifies our future, and allows us to fulfil our customers’ expectations.”
“A successful approach to sustainability requires long-term dedication and innovation. Next to ensuring your house is in order, you have to help your suppliers reach the same high standards you have while still keeping an eye on profitability”, concludes Maurice.
About the SINN-Network
By bringing industry peers together, the SINN-community enables members to share experiences, learn from each other’s best practices, and embrace intelligent products and services to stay competitive in the rapidly evolving (ever-evolving) manufacturing landscape.
With 400+ participants, 4 annual sessions, and 6 years of expertise, we connect industry leaders, promoting digital transformation and resilience within the industry by focusing on local supply chains, sustainability, talent management, and innovation. Prepare for challenges and learn from renowned speakers. Our trusted partners Capgemini, Equinix, and Microsoft, empower your journey.
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