Unlike much of the industry, the trade war between the United States and China has benefited congatec, which manufactures its cards in Europe. Even the arrival of new players in the Modular Computer (COM) industry such as Xilinx and current component shortages are not undermining CEO Jason Carlson’s optimism.
The company was sold to a private equity fund last year for 115 million euros to provide funds for expansion and acquisitions, with most of the senior team remaining with the company.
“I think we’re in a very good position for a number of reasons,” Carlson told eeNews Europe. “Our founding team, many of whom are still part of congatec, were involved in creating the IT modules market and driving standards where they are today. This legacy is still alive and well at congatec and for me there has never been a more exciting time for COM than today.
The company has played a key role in the development of COM standards such as COM-HPC and SMARC.
“While it would be great if there weren’t any trade wars, it certainly made our lives easier because congatec does not manufacture in mainland China – it was specifically part of the strategy to be ‘factory-free’. and multisite and specifically not to be in mainland China. , so I’m very optimistic, ”he said.
“Within EMEA, we are quite well known, but there is still a lot to do. The United States is a very large addressable market and we are growing there faster than any other region – our strength in EMEA is proof of this – many American customers are happy that our supply chain is not in China. The United States is a huge, homogeneous market.
“The APAC region is smaller but there is a lot of room for growth, but there really is a significant difference in Taiwan, Korea and Japan. For me personally, I think there is a tremendous opportunity in Japan – its strength in industrial automation, medicine and automotive and these are markets that we play in. Japan is most similar to Germany when I compare the two, so it’s about investing smartly in each country, ”he said.
“We have been to China and we have grown up kindly and carefully, interested in customers with a long-term view. In Japan, this is pretty much the norm. In Korea, we have a long history in the medical field and we are working to expand into AI and robotics. “
Component shortages are a problem.
“This is my fifth role as CEO and mostly in semiconductors, so I’m used to allocation and semi-cycles, but I can’t remember a time when shortages were so big in tech. , companies and regions than at present – it is surprising, frustrating and stimulating to me. ”
“In the fall we saw NXP extend their delivery times – we thought it was more of an NXP problem than an industrial problem, then there were shortages of wafers, then memories, power management ICs, then copper, so it seems unprecedented.
“With a factory-less model you have 1000 components on a board, whether it’s a 20c capacitor or a $ 500 processor if you run out, you can’t build or ship the board. We have our CEMs and their purchase volume is large and we do our best to use it, but even with no allocation we have a global supply chain team building relationships with suppliers key components – now the reality is 8-10 weeks has turned into 40-50 week lead times and it’s hard to answer because we don’t have a year of inventory so we buy products on the spot market. “
This is particularly difficult with higher demand as part of the response to the Covid-19 pandemic.
“We tend to be close to the book-to-invoice ratio of 1: 1, but in the first quarter, if we booked at this level all year round, we would have twice the size, so we had a 2: 1 ratio without precedent and that is where the danger lies ”. he said.
“The Covid-9 experience was a catalyst for Industry 4.0. If you had a plan to automate processes then all of a sudden that timeline has to go faster and we see the benefits of that, but there is the creation of entirely new apps to do things in a fully automated way and by adding intelligence to the edge 24/7, so they want the computing power at the edge, ”he said.
“We are and will remain independent of the processor, whatever the market wants, we will respond, not just x86 or just ARM – the GPU is very interesting, we have applications with processors and GPUs side by side and it is very interesting – where there is complexity there is an opportunity for congatec.
Long-term supply is a key issue for industrial applications.
“Our customers look to us for high performance, high reliability products that will be available for a long time and that will last 5 to 10 to 15 years. With Qualcomm, I question the long-term commitment to the markets we have served for over a decade – its search for that balance. “
A key issue is the growing role of software on boards of directors. This was highlighted with the acquisition of German hypervisor software developer RTS in 2018.
“It’s easy for a semiconductor manufacturer to develop software that the customer will use if you bundle it for free. My strategy when acquiring RTS is that if I want it to be a major software company, it has to run on our competitors’ hardware. I think we need to create more value there and get paid for it. ”
It does not intend to compete as a cloud service provider with Google, IBM, Microsoft and Amazon, but there is an opportunity for specialized cloud services for industrial companies.
“What I see, and in which we want to invest more, is that it’s a market that doesn’t want to connect their devices,” he said. “If a CPU manufacturer has a problem in the field, in the past the only way to upgrade was to update the firmware on a USB drive. We could provide them with software to enable them to do so in a secure manner. We’ll add value where others can’t, as it can range from I / O to the hypervisor. “
Overall, Carlson is optimistic.
“There are lots of opportunities for us to have very good growth over the next five years – when you think of the increased complexity and performance, there are the i.MX8, V100, v2000, Ice Lake, we can be designed into something with 20 or 30 complicated sensors. This growing complexity with multiple operating systems on the same silicon is testament to our purpose and our strength. If anyone wants this complicated system and congatec to be the integrated brain, I see a great opportunity. I think the average ASP will increase as there are more and more volume opportunities for the higher performing CPU product. ”
“With ComHPC, you’ll see more and more of it – we’ll be able to tackle applications that we never could before with the most I / O and bandwidth, it’s super exciting.”