Q&A Sidebar: Picking Partners
STMicroelectronics President and CEO Carlo Bozotti explains why strategic alliances are key to companies looking to lead in innovation.
As Geneva-based STMicroelectronics NV (STM) looks for new ways to drive the semiconductor market, it has formed partnerships with other companies to get a boost in the race for groundbreaking innovations. Here, the company’s president and CEO Carlo Bozotti shares his take on what makes for a strategic, symbiotic and successful alliance.
ST has formed many partnerships to help drive innovation. Why is this necessary?
Building partnerships is in our DNA. We have partners on the customer side and partners on the business side. On the business side, consolidation is certainly a trend in our industry. Driving that consolidation is the intensity of R&D. Despite our size — $10 billion plus in sales — the effort to develop, for example, 20-nanometer-chip fabrication technology would be too expensive. So in this case, we decided to share the effort with IBM Corp. (IBM). We contribute our low-power technologies, but developing next-generation process technologies is a massive effort. Similarly, in the area of wireless technologies, developing the next generation of the modem standards and the applications’ processors and connectivity features, like GPS and Bluetooth, is a massive effort costing about $1 billion a year. So we partnered with another global leader, LM Ericsson.
On the customer side, a major transition is under way, moving from ASICs, or application-specific integrated circuits, toward platform solutions for a wider range of customers. So we’ve established strategic alliances with major customers, including Hewlett Packard Co. (HPQ) in the area of printers and Bosch Ltd. for automotive products. Also, particularly in emerging applications, such as health care, energy savings and security, we also need to work with smaller and startup companies to help nurture their ideas.
What are the important qualities you look for in these large and small partners?
One important characteristic is the need to have a good match, technologically, with the partner. But another has to do with attitude, trust and passion. If you have to bring in tons of lawyers to establish a new partnership, that’s not a good way to start.
Chips plants are incredibly capital-intensive, and innovation is very high-risk. How do you balance that risk with the need to keep the plants running?
You need to have a proper organization, the right processes and the right people to nurture innovation, which is about talent identification, talent management, and engagement and learning. Sometimes it is in the same organization, other times in a different organization within the company that focuses on the longer term; and sometimes it is with an external partner. In all of our businesses, we make sure that the innovation process is well embedded in our everyday life and that we have the right matrix to track and measure trends for potentially disruptive innovation in development.