Socionext: On the Right Track

In 2015, the LSI business of Panasonic and Fujitsu was combined into Socionext. Markt&Technik asked Toshihiko Tanaka, President of Socionext Europe, how the company has developed so far.

Markt&Technik: Were the goals set in 2015 when the company was founded met from today's perspective?

Toshihiko Tanaka: In Europe, for example, we increased our business opportunities and design wins by strengthening our sales resources. We are therefore planning significant sales growth for this and the coming years. The situation is different in China. The Chinese market is growing more slowly than we expected. This particularly affects the ASSPs for televisions and ASICs for optical transmission.

Is Socionext planning an IPO?

Yes, an IPO is planned five years after the company's launch, i.e., in 2020, but no date has yet been set.

Why was Socionext's first CEO replaced after such a short time?

Our original CEO, Nishiguchi-san, brought along extensive experience from his previous industry leadership positions that were essential for Socionext in establishing itself as an independent company and implementing comprehensive management systems. This goal has now been achieved. Our new CEO, Masahiro Koezuka, has been involved with Socionext from the very beginning.

Socionext has six business units (BUs). Which is the one with the highest turnover and which is the one with the strongest growth?

For European sales, automotive ASSPs and ASICs for optical transmission play the most important roles when it comes to sales. If this is the largest growth in Europe, then ASICs for industrial applications, codecs for broadcasting technology, and image processing processors (ISPs) are the fastest growing product groups for surveillance cameras. Socionext's largest share of sales results from our business with custom SoCs, i.e., ASICs for the consumer market.

In sum, however, I would say that no BU is disproportionately represented. However, a pleasing trend can be observed: The BUs specializing in the development of ASSPs show stable sales growth.

Besides industry, automotive is one of the two sales markets with the strongest growth in the semiconductor market. As an established automotive player, will Socionext benefit from this disproportionate growth?

In general, our automotive business is growing in line with the market. However, we have certain differentiated products, such as the APIX interface chip and the Omniview solution for surround view applications, for which we expect above-average growth despite the tough competitive environment. We also see strong growth potential for ASICs in the automotive market, primarily driven by the introduction of new technologies for autonomous driving. An example of this is a design win for a lidar application.

What are the most profitable applications for Socionext?

All our businesses are profitable. It is difficult to determine which area is the most profitable, as this naturally depends on the necessary R&D costs and the sales volume. But one thing can be said: The fastest growing application area is IoT applications, i.e., applications with edge computing and graphics. That is why we concentrate on this and offer our customers a solution-oriented offer in this area.

Is the majority of automotive sales still generated in Japan or what roles do the regions Germany, Europe, and the USA play for Socionext?

Automotive sales revenues are highest in Japan due to our excellent long-term customer relationships and reputation. Europe, especially Germany, also makes a significant contribution, especially through the presence of our Graphics Competence Center in Neuried near Munich. US local automobile sales are less significant. However, automotive is a truly global business and we are seeing design wins and revenue growth with key accounts in all regions.

In the USA, the majority of sales are not based on automotive applications, but on new applications, such as GoPro with its action cameras, i.e., applications from the IoT world.

How do you assess Socionext's chances in the field of machine learning/AI?

On the one hand, Socionext with its ASICs certainly has opportunities in the field of machine learning and AI. On the other hand, we have started developments in cooperation with partners in order to be able to address these applications with ASSPs.

Last year, Socionext partnered with Gyrfalcon Technology to jointly develop energy-saving AI server ICs to be completed this year. What is the status quo?

The promotion of AI server ICs with Gyrfalcon has already started. And we are sticking to our schedule, which means that the products will also be delivered this year.

There is also a lot of competition here. What is special about the Gyrfalcon Socionext components?

The advantage of our solution is clearly its low power consumption. Compared to all products presented so far, our ICs are by far the best components in terms of power consumption. This was also rated highly by many customers. I think this puts us in a clearly preferred market position.