Philips Electronics NV says it is investing billions of dollars in its semiconductors division as it aspires to power it into the big league, and the investment will lead to new plants in all important world regions within the next five years, semiconductor chief executive Doug Dunn told Reuter. The division is investing well over $500m this year, and would continue to do so in the coming years. In the semiconductor market segments where Philips is most active, growth is around 30%, and Philips is performing in line with, or better than, he said. The company has mapped out an ongoing investment scenario for the next five to 10 years, and priorities in choosing locations will be to avoid severe currency fluctuations and to tap into pools of skilled labour. Ph ilips will expand production 30% this year by filling up existing plants with fabrication equipment but it will have to find new locations from next year, he said. The company is also weighing strategic alliances with competitors and customers in an attempt to plug some of its weaknesses. The acquisition of 51% of IBM Corp’s chip plant in Bolingen, Germany, last year was an example of what the company has in mind, Dunn said, giving Philips Semiconductors access to memory chip and microprocessor expertise, fields in which the Dutch group had limited experience. Philips will use the IBM technology to develop hybrid chips that combine memory and logic. This is the way we will facilitate the next generation of advanced television systems, Dunn said. The next area where it may need to seek outside expertise is in graphics, clearly a key area in the future of multimedia personal computers. He reckons profitability at the chip unit can be sustained as its product range is constantly upgraded, which offsets the ongoing pressure on margins in semiconductors.
