Reporter’s Notebook: The European Outlook

London in November was like summertime in San Francisco: Mostly overcast, often foggy, drizzly and cold. I didn't have a sunny day in the week-and-a-half I was there. Gartner's Egham office, outside of London, was a short walk from my hotel, but I had to cross a busy roundabout to get there, and on foggy mornings, I worried that a speeding car, invisible with its headlights turned off, would suddenly pop out from the curtain of fog and turn me to road kill. Never mind the warnings, painted on the asphalt street surface, reminding dummies like me to "Look Right" when crossing.

The Runnymede-on-Thames, where I was staying, overlooked the river, little more than a creek at that point. Gartner coworkers jested that the river would overflow its banks in the spring, generating dampness, mildew and bugs on the hotel grounds. The Gartner office complex (the company's European headquarters) was a surprisingly modern atrium, considering it lives on the outskirts of a dreary factory town southwest of Heathrow. It was close enough to the airport to see airplanes (when the fog lifted) hanging almost motionless in the sky (imagine some bowdlerized version of Gershwin's "Rhapsody in Blue" going through your head). Nobody would equate Egham with Mountain View or even Freemont, but the Blackberry folks, Research in Motion, and Future Electronics have sizable complexes there.

I was in Egham lending what I assumed would be applause and moral support to the presenters at Gartner's European semiconductor briefing (though not actually presenting myself). I had spent the pevious week at the Electronica trade show in Munich. As it turned out, I took more calls from the U.S. while in Egham than I did from European clients, though I had had a busy week before at Electronica. I wound up taking day trips by train into London's Waterloo Station, as easy as taking a commuter train into Manhattan from New Jersey (about 35 minutes in either case), though not the same as staying in the City.

My time in the U.K. might be considered a "London injection," something of a temporary fix against a better-than-vague possibility of actually moving there. My interest in living in the U.K. goes beyond living among the Brits, whose customs, mannerisms and accents on the language never fail to amaze me (see for example, Sarah Lyall's "The Anglo Files: A Field Guide to The British"). I have an interest in the European members of the semiconductor industry, and, thinking about the possibility of using me as an "ambassador" to those companies, my management is considering my request to transfer.

 

When the world stopped dead

Despite a heavy rain the day I landed, I did see sun in Germany, a warm autumn glow with the sun hanging low in the sky. The mood at Electronica, like the weather, was crisp, sunny and upbeat, with semiconductor suppliers congratulating themselves for bouncing back after a difficult recession. The American companies gave interesting and informative press conferences and presentations, but it was the same sort of briefings you would see from companies like Fairchild or Freescale at "analyst days" in San Jose. Texas Instruments, whose sometimes colorful marketing executives were parked at same hotel as me, promoted the manufacturing muscle it built and strengthened in 2010 - a message I had heard before. It was the European companies, harder to get close to in the States - Infineon, STMicroelectronics, NXP and Austriamicrosystems - that interested me the most in that context.

Infineon, finally out of the DRAM business, staged a spectacular comeback in 2010, concentrating on strengths in analog, power management and discretes. My own recently-published preliminary market share analysis, shows Infineon's revenues growing almost 43% in one year - more than 10% better than the semiconductor industry as a whole. Infineon's CEO Peter Bauer claimed recently that, contrary to the slowing of revenue growth we're seeing among semiconductor suppliers, his company's orders continue to pour in, mostly from automotive industry suppliers, with no end in sight. "Infineon has the ear of companies like Audi AG and China's Chery Inc. that are looking to replace more expensive mechanical parts," Bloomberg reported.

But Bauer was verbally attacked by one his own customers during a CEO panel on Electronica's opening day. The panelists, Peter Clarke reported in EE Times, seemed to feel confident at weathering a two-year storm when a systems vendor, later identified as an engineer from Robert Bosch, shook her fist at Bauer and accused him of letting the customers down with faulty allocation schemes. The other CEOs - including STMicroelectronic's Carlo Bozotti, NXP's Rick Clemmer, and Freescale's Henri Richard (filling in for Rich Beyer) rallied to Bauer's defense, as if an attack on one was an attack on all of them. "You can't blame us for failing to match the speed of the recovery," Carlo Bozotti reminded the audience then, and later, in a mid-week reception. "With formerly solid institutions like Lehman Brothers slipping into bankruptcy, it seemed is if the world stopped dead." There was no buffer, no inventory to draw from when demand suddenly exploded.