Trey Brown, General Manager, GE Commercial Finance, Global Electronics Solutions

Trey Brown (Source: Global Electronics Solutions)

As general manager of GE Commercial Finance, Global Electronics Solutions (GES, San Diego), Trey Brown has been instrumental in developing GES into a global leader of equipment lifecycle management. Most recently, before joining GES, he created the GE Capital Technology Team, dedicated to the global service of distinct electronics vertical markets. Before joining GE Capital, Brown held various positions with Fleet Credit, U.S. Leasing (now GE Capital CEF) and Sanwa Business Credit's Vendor Finance Group (now Fleet). GES offers equipment lifecycle management services for users of semiconductor manufacturing, ATE and PCB assembly equipment. This includes equipment financing, and sale or leaseback of existing equipment; equipment optimization and management; and equipment remarketing.

SI: GES is a global remarketer of used semiconductor equipment, as well as a consultant on the most efficient use of this equipment. It also offers financing. Can you briefly describe how this works?

Brown: We're focused on the full circle, lifecycle management aspects of what you've described, and on balancing the front-end advisory and financial services with the consulting that comes along with optimizing the best use of manufacturing assets once purchased, and then retiring them efficiently and profitably. We pay close attention to indicators that point to both the new and used markets, and industry cycle trends. We coordinate all this for the benefit of the client to enable us and them, in upswings, to take advantage and capitalize on the industry's recovering economics, and in the downswings to manage and mitigate the potential liabilities as much as possible.

SI: You mentioned indicators. Do you follow the industry's indicators, or have you developed your own?

Brown: A mix of both. GE in general, and certainly GES, isn't in the business of predicting trends, but we like to think of ourselves as being proactive rather than reactive. When you've invested in the manufacturing sector generally, and in electronics specifically for the past 30 years, you want to think you have learned a little bit about the trends involved and mistakes that you may have made. We use our portfolio history internally as an indicator. We also make use of the unique advantage that we have in the aftermarket dynamics — price points on used assets — as the world's largest remarketer. Then we add the more public and more visible indicators that are driven by the economy and technology, which track manufacturing trends in electronics.

SI: You have a global base of customers. What sort of a support infrastructure to you have for them?

Brown: When we merged GE and Comdisco, we listened to the client base around the world to best determine where they needed to be served, and reacted accordingly. So we took full advantage of what Comdisco had as a global presence, both in the financial and technical services area, and married it to GE's global footprint and resources. This met the requirements demanded by our clients, an increase in trends for manufacturing, activities in Southeast Asia and Japan — the Pacific Rim in general — and a leveling in Europe and in the U.S. Now we can respond regionally as well as globally. We have resident resources and a considerable infrastructure in all those regions.

SI: How much are you doing in China? What sort of a presence do you have there?

Brown: We have local representatives in Shanghai servicing our client base in China. We have been focused on filling the need for used semiconductor equipment over the past two years, and we're very busy researching the possibility of offering our financial services in this region over the next years.

SI: Downturns affect you differently than the rest of the industry, because during difficult times some companies are willing to consider used equipment. How has the end of the recent downturn affected you?

Brown: You could say that our business model has three pistons — some working harder than others to deliver client services. Unique to the upturn is that used equipment demands are high, because the price for admission is higher this upturn than ever before. So, while many are going to 300 mm, we've experienced an increasing demand for 150 mm technology. I believe we're seeing a bifurcation between the haves and the have-nots on the leading edge of technology. Incidentally, the have-nots are in an excellent position to take advantage of the manufacturing capacity demands for component device production, and perhaps lower-tech end products.

We're not suffering from the demand for used equipment; what we're suffering from is access. Everything goes from over-inventory to sparse availability in an upturn. We're working hard to increase our remarketing relationships to ensure we won't be scrambling to provide for our clients.

SI: So orders are coming in?

Brown: Yes! It is no longer a sin to want to buy equipment — whether new or used — to increase your capacity. Companies are beginning to spend again.

SI: Has the downturn affected any of your short- and long-term plans and strategies?

Brown: Absolutely! We're as dynamic as one can possibly be about changing our business model whenever necessary, without affecting our core business proposition, which is lifecycle management and partnering for managing the liability of very expensive ownership of manufacturing assets in electronics. The biggest challenge we see now is influenced by the prospect that we have longer-lived assets coming off the OEMs' lines, which are triple the expense that they were before. Accordingly, our business model must be even more effective at sightlining values in the future, and provide flexibility for our clients to make multiple decision points on the use of those tools three to seven years from now. Before the downturn, people talked about two to three years' equipment use followed by fast ramp-ups. Now, of course, the price OEMs are commanding for 300 mm technology does not allow them to do that effectively. Four years ago, you could ramp up a fab for about $750M to $1B; now, the average fab costs $3B!

SI: What are your expectations for this year?

Brown: Very high. The numbers we're targeting are large, and I am sure we'll hit them. Our global scale works in our favor.

SI: Is there anything that you would like to change in our industry if you could?

Brown: I'd like to change the shortsightedness that some OEMs display in the aftermarket protection of their collateral. While I understand that's a sensitive issue for many of them, who are getting increasingly involved in refurbishing and redeploying some of their older technology, I believe that they do so at the expense of longer-term assistance for the same technology.

In used equipment, we obviously compete with a number of OEMs. In many cases, when they take in a piece of equipment to refurbish and deploy, it is a matter of protecting price, and they don't do a very good job of refurbishing the tool. I would like to see a somewhat less myopic evaluation of the broad market, and agreeing to hold prices and alliances with one another. This doesn't mean I'm suggesting price fixing. What I am suggesting is a more strategic prediction of requirements, which will allow prices to be predicted and control somewhat better. After all, the pressure originates with the device makers, driven by the need to reduce the price of their products. In many ways, all of us in the semiconductor industry are victims of our own success.