help to usher in the future of semiconductors.
IoT, cloud, 5G and other phenomena that are bringing major changes to our lives all require the use of semiconductors, and the semiconductor industry is now worth over 50 trillion Japanese yen.
What types of strategy will TEL adopt to tackle this new phase? What kind of impact will this have upon people and society? We interviewed two people involved in proposing TEL’s management and technological strategies about the philosophy behind the company’s Management Policies, which affirm the pursuit of profit.
for Strategy Masaki Yoshizawa
Strategy Division Sumie Segawa
“The semiconductor industry has experienced unbelievable growth over the past few decades. But we expect the pace of growth to dramatically exceed this in the coming years. Presently, we are at a turning point.”
This is how Vice President and General Manager for Strategy Masaki Yoshizawa describes the environment surrounding semiconductors.
“The demand for semiconductors is spreading, from smartphones for personal use, through to social infrastructure. IoT, cloud, AI, autonomous driving, and 5G ("ICAC5”), enabled by big data, are all driving demand for semiconductors.”
But that is not all. According to the Development Strategy Division’s Sumie Segawa, technological development is also entering a phase change. “Until now miniaturization held the key for semiconductor evolution. The smaller the semiconductor could be made, the greater the achievements could be made in speed, functionality, lowering of power consumption and cost reduction.”
However, in physical and also cost terms, they have reached the limits to miniaturization. So what should TEL do?
“The concept of domain-specific chips has also been proposed, whereby, rather than advanced chips that are suited to any application, specialized chips are manufactured with functions limited to those which are required. Although some customers aim to improve the processing capability of chips regardless of the cost, others seek only specific functions, such as high-speed processing of specific images.”
There is a shift from mass production and consumption of general purpose devices to limited production of a wide variety of specialized devices. This requires new initiatives, including for production technology.
Segawa continues, “Energy-efficiency is also a major issue. The power needed by data centers is not only that used to drive the semiconductors. There is also a need for cooling to counteract the heat generated within the facilities by the use of semiconductors. It is often said that half of such facilities is taken up by the cooling equipment.”
According to Yoshizawa, one of the causes of heat generation by semiconductors is that the calculating and memory functions, corresponding to processes handled by the left-side of the human brain, are processed using different methods to the human brain that require much energy. For this reason, even if computers equipped with AI are able to defeat humans in games such as go or shogi, they consume a much greater amount of energy.
“For example, for the work that a human can perform after eating one rice ball, AI would require something like 1,000 rice balls. If the match were contested based on a one-rice-ball versus one dry cell, the human would win outright.” It is said that we would need the output of an entire power station to perfectly mimic the human brain with the current technology.
“How much can we achieve with lower energy consumption? The semiconductor industry is starting to see a trend similar to the automobile manufacturing industry’s shift towards energy efficiency, such as hybrid and EV. The rules of contest are changing. If semiconductor technology progresses, we may be able to develop devices that start to perform right-brain functions, such as sensitivity and inspiration.”
TEL affirms the pursuit of profit at the top of its Management Policies. This is supported by the unique fact that semiconductor production equipment is a complex of advanced technology.
Segawa explains that, “Development of technology requires the accumulation of technology in many fields, such as machinery, chemistry, physics, electronics, software and materials. Moreover, technological innovation occurs rapidly, so the first company to develop the best technology will conquer the market. Consequently, strategically, it is essential to implement large-scale upfront investment and to establish the financial foundation to focus on development of technology ahead of competitors.”
Yoshizawa adds that “This is why the hurdles to enter the industry are so high. Even if a company is able to gain the lead in one technology, the biggest challenge is to secure the highest level of technology in the remaining 5 or 6 fields. This is the reason that the number of players in the industry is shrinking.”
In an industry with fixed players, simply operating according to a strategy of capturing market share from rivals will result in fatigue for the industry overall. Rather than reduce profits through price wars, each company needs to develop solutions not offered by rivals, or to, for example, offer the solution only provided by TEL, in order to raise the industry’s overall level of technology.
Yoshizawa, as part of the management team, believes the most important challenge lies in further strengthening of the company’s financial base.
“The semiconductor industry’s mission is to continue providing solutions to the increasingly challenging problems faced by humanity, and to achieve this, it is essential that we secure the best talent. Furthermore, our role is to establish an environment where employees who bring their dreams to TEL are able to tackle such issues to their heart’s content. This is one reason why we focus on achieving a high profit ratio.”
Yoshizawa adds that “Profit is one measure of appraisal from society and customers. When we have been able to provide the solution for a hitherto unresolved issue, I believe that profit is an indicator of the appraisal and appreciation of society. It is a sign of recognition that our technology has great value. We can also say that, because we continue to expand our circle of profit circulation, we are able to further tackle challenging issues based on our firm financial foundation, becoming a company that is essential to society.”
The fact that TEL is able to exercise a strong presence in this fiercely competitive industry is also thanks to its unique corporate culture. Even Yoshizawa, who saw many companies when he was a consultant, believes that TEL is a unique company.
“TEL has an atmosphere that allows freedom to express one’s opinion, regardless of age, title or position. Considering the scale of the company, there is remarkably little reliance on conjecture or hierarchy by length of service.”
One reason for this is the importance of innovation in this industry. “Innovation is achieved when one new idea can be linked with another. New ideas cannot emerge unless the mind is relaxed, and it important to provide an environment where people can readily express ideas when they occur. The company cannot hope to advance without an atmosphere where people feel free to share even wild ideas.”
Segawa adds that “Another characteristic of TEL is the co-existence of individual ownership and teamwork. Because it is an industry where individuals who first produce the best technology gain recognition, in-house appraisal is also results-based. Consequently, it is rare that we drop the ball in fulfilling our mission, and in most cases, we take the initiative in taking on work. I believe it is because we have many employees who like to work. Another strength is that, despite already being a large business, we still have the character of a venture company.”
However, this is not the same as individualism. According to Yoshizawa, “Because there is a strong sense of ownership for work, we also value the teamwork required to succeed.”
Since its founding, TEL has set its own business model and technological challenges in response to the changing times. In deliberating the vision for 10 or 20 years in the future, there are more opportunities to ask whether technology that made society more convenient also brought more happiness.
Segawa explains that “As semiconductors become more and more a part of everyday life, increasingly, devices are required that store all of a person’s personal data to operate, and it has been said that the time will come where people have chips implanted. However, we must also ask who personal data belongs to, and to what degree we can control human consciousness. The perspectives of sociologists and cultural anthropologists are also essential, working in tandem with technological development, asking what it means for people to live happily.”
For this reason, in its role supporting the semiconductor industry, TEL is charged with a great mission, in technological, production and also ethical aspects.
Yoshizawa summarizes, “The evolution of semiconductors will continue as long as humans continue to evolve. The efforts of those of us who work in the semiconductor industry will aid the evolution of humanity, and semiconductors will continue to advance to keep pace with that evolution. There is no end in sight for the semiconductor industry.”