Interview / David Somo
Vice President of Strategy and Marketing at ON Semiconductor

- How do you view the outlook for the global semiconductor market in 2016?

The semiconductor industry is expected to face headwinds as it enters 2016. While China, the world's second-largest economy, is projected to grow its GDP by approximately 6.5%, GDP growth in other countries is expected to be weak.

The United States may see slightly higher GDP growth than other countries as the Federal Reserve takes measures to raise interest rates for the first time in nearly a decade to stabilize the economy. If this forecast holds true, the global economy will record low GDP growth for three consecutive years, hovering above 3%.

As the semiconductor industry enters a mature stage in terms of market and technology, it is highly likely that its annual growth rate will approach the global GDP growth rate. Therefore, it is expected that global semiconductor sales in 2016 will proceed at a moderate level, with almost no significant growth.

What are your views on future development trends in the industry, and which technologies and applications do you see as more promising in the coming years?

As existing consumer markets related to home appliances and computing enter a mature stage and gradually decline, various new growth drivers are emerging in the semiconductor market. Taking the automotive market as an example, several major trends driving continued growth will persist. The pressure for improved fuel economy and the need for lower exhaust emissions are driving further advancements in automotive electric systems.

Specifically, HEVs and EVs, as well as start-stop altonators, dual-clutch systems, multi-speed, and continuously variable transmissions, will increasingly be developed as new features. Furthermore, as the era of the autonomous vehicle market approaches, the adoption of automotive safety features is expected to advance further in the form of ADAS and 'connected cars'.

What new technologies and applications is ON Semiconductor focusing on? What are the new strategies resulting from this?

ON Semiconductor is a top 10 automotive semiconductor supplier offering a diverse product portfolio that enables the development of new automotive functions. ON Semiconductor will maintain its position as the world's leading supplier of image sensors for various screens and ADAS system cameras, as well as components for the latest front lighting systems.

Another major trend in the semiconductor industry is the increasingly mainstream Internet of Things (IoT). As this market becomes more intelligent, more electronic devices will be interconnected with various interactive functions in the future. IoT is expected to spread to diverse industries such as smart factories, homes, agriculture, shipping and transportation, and retail environments, and will be applied to billions of new products over the next 5 to 10 years.

Each of these devices will increasingly require sensors, wired and wireless connectivity, microcontrollers, and power management components. ON Semiconductor is providing these products more extensively to enable customers to rapidly develop and launch IoT devices.


What are the opportunities and challenges ON Semiconductor faced in 2016, and how will it address these challenges?

ON Semi aims to further solidify its position as a global leader in power solutions in response to the aforementioned growth opportunities. ON Semiconductor already offers an extensive portfolio in energy-efficient power and battery management that features improved power density and efficiency. These products are used in a variety of applications, including data center UPS systems that serve as backbones for cloud computing and online commerce, as well as solar inverters and PC power supplies.

We view the biggest challenge facing ON Semiconductor and other semiconductor companies in 2016 as limited growth due to the sluggish global economic outlook. To maintain profitability in a competitive environment, we will carefully manage operating costs and continue cost reductions across our manufacturing network. Furthermore, we plan to strategically allocate resources and R&D investments to develop more innovative solutions by leveraging the aforementioned key growth drivers.

In 2015, China's semiconductor industry very actively led various corporate mergers and acquisitions. How do you view this trend?

2015 can be seen as a year in which an unusually large number of mergers took place in the semiconductor industry. Good examples include Avago's acquisition of Broadcom, Intel's acquisition of Altera, NXP's acquisition of Freescale, and On Semiconductor's ongoing acquisition of Fairchild.

Although R&D and capital investment are becoming more active, the growth of the semiconductor industry is also gradually slowing down as moderate economic growth is predicted from a macroeconomic perspective. We forecast that China will continue to invest in research and development, acquisitions, and mergers in 2016.