André Auberton-Hervé, Soitec President and CEO

André Auberton-Hervé co-founded Soitec (originally Silicon-On-Insulator Technologies, Bernin, France) in 1992 and currently serves as chairman of the board, and corporate president and CEO. Before that, he spearheaded an industrial development program focused on CMOS technologies between LETI, a French government-supported research organization, and Thomson-CSF. Under his guidance, the program led to several successful industrial transfers and, at SEMICON Europa 1999, he was presented with SEMI's Award for Europe for Soitec's development in SOI technology. Prior to that, Auberton-Hervé was responsible for a number of European technology projects that involve 3-D integration and SOI applications research for rapid ICs. In addition to 20 years' experience in SOI technologies and the semiconductor industry, he completed his doctoral dissertation in physics in the area of semiconductors. He also holds an engineering degree and a Ph.D. in physics from Ecole Centrale de Lyon in France, and is a member of IEEE and the Electrochemical Society. Soitec produces thin-film SOI wafers.

SI: Obviously, 2001 has not been a very happy year for our industry. However, Soitec does not seem to have been overly affected — you ended 2001 with sales of $38.2M (€43.3M) and a net income of $3.6M (€4.1M). Can you tell us about this and how you view 2002?

AH: Since our fiscal year runs from April to March, the numbers you quoted are for March 2001, but the first half of our fiscal year (end of September 2001) was also very good — $33.5M (€37.9M) of sales with positive net income. This reflects a three-digit growth, but it's nothing new to us, since we've been growing at that rate for the last three years. The April-September period was one of the worst in the history of the industry, yet we managed to maintain that three-digit growth rate.

SI: Does this mean SOI is beyond these cycles?

	André Auberton-Hervé (Source: Soitec)

Last year was quite good because most of our customers are preparing for the next upturn. This is very good timing for the introduction of innovation, and explains why we did well during one of the worst downturns of our industry. These two trends — the adoption of SOI as the new standard and the acceleration factor, due to the industry preparing for the next upturn — have favored us.

SI: So you see 2002 developing as a good year for you?

AH: Yes. Our fiscal year ends March 2002, and we believe we'll at least double our sales, compared to the last fiscal year, ended March 2001.

SI: Are you experiencing an increase in orders?

AH: Indeed we are. Our bookings are very good, and our performance last year does much to support this optimism. Also, most semiconductor key players have announced their strategic switch to SOI for technologies ranging from 0.13 to below 0.10 µm. It definitely appears that SOI is the next silicon standard. We were very fortunate last year when AMD announced that we would be supporting their next-generation "Hammer" family of next-generation microprocessors, which incorporates CMOS-based, partially depleted SOI circuits.

SI: Now that the euro officially has become the common currency, putting the capstone on the European Union, do you see any changes in how you do business?

AH: Our European sales have been tremendously simplified by this. However, the bulk of our sales take place in the United States, by far our largest market. As a community, we experienced this implementation much earlier because we were using the euro for business and financial transactions well before it started circulating as currency.

SI: Overall, what are your short- and long-term plans and strategies for Soitec?

AH: We have a business model that is a composite of IP and industrial production. In a way, we created the SOI market since we were the first to invest in it in any significant way to provide those wafers. The timing was excellent for us in that we began supporting the industry at the time the industry began moving toward SOI. We plan to continue to support our customers. We're committed to supplying more SOI wafers, particularly as other industry key players begin relying on us. At the same time we've developed an IP portfolio of technology. We have a very nice innovation engine, to provide new materials not only for the semiconductor industry but to other segments of high tech as well. An example of this is the partnership we have with Seiko Epson to provide them with monocrystalline silicon on quartz, which targets certain consumer applications. We plan to develop these two segments of our business, providing SOI wafers (our largest market segment), but also providing technology and solutions to the industry, creating breakthroughs and innovation for materials to launch new products.

SI: Does it appear that growth is getting more difficult?

AH: I don't think so. The growth in SOI started as its adoption as the standard. It began at 0.18 µm, and the more one scales down, the more things go to SOI, where this new material is key. The silicon market by itself is worth some $7.5B, and SOI is in the lead to provide the necessary silicon solution for the <0.18 µm technology.

SI: Is there anything that you are planning to change in the company?

AH: When you've got a three-digit growth rate, that means that things are moving very fast and changes take place. But overall, I believe in people. We have hired skilled and experienced people — last year we hired a CTO to support the IP model we discussed. All this increases our strength. We're actively seeking solutions beyond just our SOI sphere. At present, the most outstanding support we can provide customers is capacity. We're committed to bring in a new factory this year, to be completed by July. The next step is to get as close as possible to our customers, and for this we are investing to raise our capacity overseas — beyond Europe.

SI: In the United States or Asia?

AH: The United States is a good first step. We're certainly considering Asia; however, 80% of our SOI market is in the U.S. We want to be better able to serve our key core of customers there.

SI: What are you planning to do differently from your competitors?

AH: We're in a very special position, at least presently, in that we don't exactly have competitors. Today, we have 80% of the market. Aside from that, I believe how you time innovation is an important factor, as is how supportive and responsive you are to your customers' needs. It may not be very original, but it certainly works. We've also been fairly accurate in predicting market changes, which, of course, is crucial when you're working at technology's edge, to be able to take advantage of that insertion window. In SOI's case, for example, it's a considerable change — people must make decisions and move to adopt it. Timing and partnership development are crucial, as are the industrial alliances which are necessary to switch an entire industry to a new standard.

SI: Considering the overall post-PC semiconductor industry, where do you see the next growth areas?

AH: SOI, I believe, reflects the industry's need to offer a technology platform that offers the widest possible range of applications. The key issues that are going to fuel growth are power consumption (which encompasses heat dissipation) and performance — whether in a PC, PDA, or any other device. Materials are another area because they are increasingly becoming sources for innovation and new products.

SI: Are there any industry trends we ought to be paying more attention to?

AH: Consolidation is one. As the industry matures, the cost of innovation and the race toward miniaturization demand more capacity. I believe that the increase in consolidations is a proof of this maturity. Consolidation also has a tendency to slow down innovation, and this is something we must be constantly aware of, to avoid it. The cost of innovation must be addressed, and this is being done through partnerships and consortia to invest in technology. All of this is, of course, fueled by competition that, paradoxically enough, has competitors joining forces because development costs are so high.

SI: Do you think there is a way to minimize the industry cycles?

AH: Consolidation should help because it tends to reduce overcapacity, overproduction and overreaction. As the industry continues maturing, the curves should smooth out a bit. Naturally, the end market plays an important part in this — the diversification of end applications — bringing new drivers beyond PCs is key.

SI: If you had the power, is there anything you'd like to change in the industry?

AH: (Laughing) We French are known to be arrogant, so I would have to be very careful how I use that power. I believe I would increase the number of partnerships taking place. This is crucial to bring innovation and shorten product cycles. People must cooperate much closer to cope with the way the innovation food chain is developing. This would also ameliorate the cycles we experience.

SI: How would you describe your management philosophy?

AH: I believe in people. I am open and respectful with them and I expect the same in return. I am open to new ideas that challenge me and the company. I am focused on timing, because it is the door through which innovation enters.

SI: What will Soitec look like in five years?

AH: We will be a key part of our industry, providing a large volume of material — mainly SOI — and a solution provider in the shape of IP and innovations, profiting from our licensing options. We will be a $1B-plus company.

SI: What advice would you like to give your peers?

AH: The larger you grow, the more you need to keep innovative spirit as your main driver. Also, pay attention to your timing. Often, people overestimate or underestimate markets.