In the downward cycle of semiconductors in the past year, the automobile and industry have become one of the few subdivided downstream industries that have remained stable or even have some growth.
These two categories of markets in China are also developing rapidly, and are beginning to lead in some segments. This also attracts semiconductor supply chain manufacturers to take root in the local area and fully support symbiosis with the industrial chain.
Recently, Zhao Chuanyu, vice president of the China region of the global analog chip giant ADI (Analog Devices Semiconductor), said in an exclusive interview with the reporter of the 21st Century Business Herald that ADI has entered the Chinese market for nearly 30 years and is still continuing to deepen its local team building and customer support. For ADI, the Chinese market is not only a commercial reward, but also a further spur for innovation.
In the face of competitive pressure in the current pressure cycle, it is necessary to maintain innovation vitality while working with customers to find better solutions. As a result, ADI has long been no longer a simple analog chip manufacturer, but has long had digital chip-related products, and has begun to extend its tentacles to the construction of software algorithms, hoping to maintain a differentiated competitive advantage in the next ten years.
Zhao Chuanyu. Data map
Rooted for nearly thirty years
21st Century: Please briefly introduce the development history of ADI in the Chinese market, and do you feel the new changes brought about by China's reform and opening up?
Zhao Chuanyu: ADI is a company founded in 1965, entered the Chinese market in 1995, and has been in the Chinese market for nearly 30 years.
From the earliest establishment of a branch in Beijing, and then gradually expanded to Shanghai, Shenzhen and other cities in China, ADI has formed a comprehensive and complete network of products, sales support and services in the Chinese market.
In 2019, ADI upgraded its China R&D center to the China Product Division, enabling us to complete a one-stop service in the Chinese market, including demand research, product definition, design verification, delivery, and sales support.
In 2020, the Chinese operating entity will be upgraded to Analog Devices Investment Co., Ltd., as the headquarters of ADI's investment and operation in China. This represents ADI's commitment to long-term investment in the Chinese market.
21st Century: How has China's gradual integration into the global economy affected your company's development?
Zhao Chuanyu: ADI has been a witness to China's reform and opening up over the years, and we have benefited greatly from the take-off of China's economy, and we can say that we can empathize with the development and change of our customers.
As a U.S.-based semiconductor company, our growth in the Chinese market was initially based on the sales of products defined by overseas market demand, but over time, we found that the R&D capabilities of our Chinese customers were changing day by day. We are not limited to selling standardized products, but also to make a new definition according to the individual needs of local customers.
Nowadays, customers in the Chinese market are also going overseas. Then the products we have defined for the Chinese market can already be provided to overseas customers. In my opinion, the Chinese market is not only a return for ADI's business, but more importantly, it can improve its ability to innovate.
Today, Chinese manufacturers have come to the forefront of the global EV sector, and we work closely with almost all of China's EV OEMs and Tier 1 suppliers to drive immersive in-cabin experiences by providing innovative audio and video technologies. Because of China's leading position in the field of electric vehicles, our success here will definitely empower us overseas in the future and write the same success story with more customers.
21st Century: How does ADI see future opportunities in the Chinese market?
Zhao Chuanyu: ADI will have the determination to make long-term investments when selecting target markets, including industrial, automotive, communications, medical, consumer electronics, new energy, etc. China is already the world's second largest economy, and the government is committed to high-level opening-up and high-quality development, and is purposefully accelerating the development of industries related to digital transformation.
Therefore, for ADI, we will select hot industries that will be visible in the next 5-10 years under the guidance of the market, and ensure that we can co-create unimaginable things with our customers through our technology.
Interestingly, our customers in China are starting to go global, and at the same time, our Fortune 500 customers overseas are also going deeper, and we believe that driven by this trend of going out and coming in, ADI will better practice "in China, for China", and use the support of local R&D to ensure that customers can go faster and better in technological innovation.
Finding your way through competition
21st Century: In the current period of pressure in the semiconductor industry, how should ADI seek breakthroughs?
Zhao Chuanyu: We and our peers are discussing the downward cycle facing the semiconductor industry. To put it bluntly, the semiconductor industry has had its ups and downs over the past half-century.
ADI has been around for more than 50 years, and we believe we have the ability to ride through cycles. In my opinion, in the downward cycle, it is more necessary to practice internal skills.
The downward cycle is a test of how we can get closer to our customers and how we can solve problems faster and more accurately. At the same time, we maintain the rhythm of technological innovation, adhere to the foundation, and always open cooperation with customers. Then it is only a matter of time before we get out of the downward economic cycle.
21st Century: What is the differentiation between ADI and other analog chip manufacturers?
Zhao Chuanyu: We must face the reality of market competition, and now we do see that the market has reduced prices, cleared inventory, etc., which brings competitive pressure to us, but this is the normal state of business.
ADI has always welcomed competition, and it is only through competition that the industry as a whole can prosper. So every time we encounter problems such as price competition and high inventory, we think about what the nature of the challenge is.
For example, ADI is focused on high-performance products, so will customers today also compete to have cost-effective products? For us, it's not so much a question of price as it is a question of the product.
When customers focus on inventory and costs, it's often based on overall operational considerations. For us, we need to consider what can help customers reduce development expenses, inventory expenses, and operating costs in addition to the price of a single chip.
We found that the key to solving the problem is not the price of a chip itself, but what kind of cooperation mode everyone uses. For example, we will enable customers to diagnose problems together when introducing new technologies, and how to be more efficient and effective at the system level to achieve lower overall costs and more competitiveness. This will make more long-term sense than simply reducing the price.
21st Century: How is ADI responding to the competitive environment in which more and more startups are emerging in China?
Zhao Chuanyu: In my opinion, digital chips and analog chips play different roles in electronic information systems, and we must be prepared to constantly face challenges, try our best to maintain our own advantages, and continue to innovate.
For example, ADI has begun to use AI technology to innovate chips, even analog chips, like digital chips, more and more emphasis is placed on the software and tools supporting the chip. We're doing a lot of new things like that.
I believe that for other partners in the industry, each company can find room to play in its most suitable positioning. So ADI welcomes competition, which ultimately benefits our customers and the market.
21st Century: How will AI technology bring benefits to chip innovation?
Zhao Chuanyu: We are using AI technology innovation in hardware design, and of course it is still in the early stages. However, we find that customers are also using AI-related technologies to innovate hardware, software, and even entire systems, and ADI needs to maintain the same pace as customers. We will explore what problems AI technology can solve, such as improving efficiency, reducing the probability of errors, and improving the reliability of the system.
Because ADI wants to invest in too many products, AI technology can work with engineers to improve product development efficiency, which is also the direction we are exploring.
From hardware to software
21st Century: Why is ADI emphasizing a shift in the focus of data processing from the cloud to the edge?
Zhao Chuanyu: In the past decade, cloud computing has played a major role in data processing, and in the future, we believe that edge computing and edge intelligence will play an increasingly important role. Here's why:
First, if everything is expected to be handled in the cloud and returned to the edge layer to tell the result of the execution, then the time cost of the whole process is very long.
However, many scenarios require feedback on the results of data processing in a short period of time, such as ensuring the throughput rate of the production line in the industrial manufacturing production line, and the data detected by the in-car camera in the intelligent driving scenario cannot be fed back to the cloud and then prompted to brake. Edge intelligence can largely provide a low-latency, reliable experience for end users.
Second, through edge intelligence and computing, data privacy and security can be well protected. When data perception, transmission, understanding, decision-making, and action all occur at the edge, all data does not need to be transmitted to the cloud and backed up unnecessarily, reducing the risk of information leakage.
Third, and most importantly, edge computing is the way to solve the problem of energy consumption. At this stage alone, data shows that the annual power consumption of global data centers exceeds the total power generation of all the Three Gorges Dam, and if the whole society increasingly wants to embrace intelligent life and embrace Industry 4.0, then the data throughput will increase exponentially in the future. If we all rely on cloud computing, not to mention the costs of hardware expansion and hardware upgrades, the energy consumption generated may not be affordable for the earth.
If we let many signal sensing, indexing, and decision-making happen at the edge, without spending additional bandwidth and computing power in the cloud, then we will definitely empower green environmental protection.
"21st Century": Edge intelligence may put forward more requirements for edge computing power, at present, mobile phones and cars can still undertake large computing power, but other IoT edge terminals may face challenges, how to solve this problem?
Zhao Chuanyu: I personally understand that the problems that need to be solved by computing and intelligence at the edge are different from those in the cloud.
There is often no need to do complex computing like the cloud at the edge, and each smart device, whether it is a wearable product at the factory production line end or real-time health detection, is often used to solve a specific task. The computing power required may not be a huge GPU module to complete, and the industry has done a lot of exploration for this.
Whether it is digital chip or analog chip manufacturers, including software and algorithm customers who cooperate with us, everyone has provided many interesting and practical solutions for different application scenarios. In my opinion, the day when everything is connected is very close.
21st Century: In this era known as "software-defined everything", is it a new challenge or an enabling for ADI?
Zhao Chuanyu: We think it's a huge opportunity. For example, ADI's in-car software showcased at a recent show is a pure software product that has been successfully released to production vehicles. For us, software is an indispensable part of the solutions we offer to our customers today.
For example, in the field of communications, we have written more than 100 million lines of software code in our products. This is equivalent to putting the complexity of product design from the customer's hands to one's own shoulders. Whether the complexity of the product comes from analog design, digital design, or even software design attached to the chip, we believe that this will bring value to the customer's product innovation. For ADI, it is also fundamental to be able to differentiate itself from its peers in the future.
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