Since 1991, Japanese firm THine Electronics has been involved in the manufacturing and sales of mixed signal LSIs as well as AI & IoT based solutions through its bases in the U.S. and Asia. Its president, Mr. Yoichiro Minami, speaks to The Worldfolio about the company’s unique technologies, history and where it is going in the future.
Since the end of WWII, the concepts of kaizen and Toyota's Total Production system have become a worldwide phenomenon in manufacturing. This attention to detail extends to the semiconductor industry too, which you are a part of, and your slogan is to "Interface to the Future", providing solutions by smart connectivity. Can you give us your take on monozukuri? What do you believe to be the advantages of Japanese monozukuri?
Our business started with connectivity, but we did not attempt to manufacture everything ourselves. Instead, we worked on establishing teams and partnerships with other companies. We have disclosed our unique technology Image Signal Processor (ISP) and have actively been seeking other partner companies. We aim to establish a protocol that everyone can use. Moreover, we have been putting more emphasis on our strength, which is fabless manufacturing. Most of the display products worldwide contain ours because we are connected to LCD. The major electronic companies in the semiconductor industry had their own production lines in the past years. However, those factories cost a lot to maintain, and it was not easy to implement changes in those production lines. Hence, we thought that being a fabless manufacturer would bring more advantages. It provides us the freedom to choose any fabless companies like TSMC. Cultivating a relationship with top foundry companies is vital because they are highly capable of manufacturing various types of LSIs, such as high-speed transmissions or products with big integrated circuits (ICs). We can select particular foundries that match our products and needs. Unless we are the best in the industry, major foundries will not take notice of us. We, therefore, need to build a relationship with them to enter the most favorable environment to grow our business. Since we are leading in that market or particular technology, we have been able to create a win-win situation.
When we interviewed the CEO of Tokyo Electron, Mr. Kawai said that he thinks that the semiconductor market can reach 1 trillion USD by 2030. In the intervening two-year period COVID has resulted in huge disruptions to supply chains and car production as well as chip shortages, so new regional approaches to bolster production are being implemented. In Japan, TSMC and Sony Semiconductor Solutions are building a new fab in Kumamoto, and in Europe the Chips Act adds EUR 30 billion of incentives, America has a similar Act with 52 billion USD in incentives. What opportunities do these regional approaches worldwide provide your company, especially as a company that operates a fabless business model?
It is difficult to talk about sensitive political matters, but we have witnessed the fierce competition between the US and China. Due to the Ukrainian war, there has been a lack of supplies and materials in Europe. We realized the importance of having a domestic production base to stabilize the supply of our products. Yet, we still foresee a more difficult situation globally. Even when we are able to manufacture domestically, we may have a shortage of other essential parts. To deal with that, we should forge a relationship with chip manufacturers in Taiwan, China and other regions.
Since we cannot obtain a sufficient volume of LSI, we have revised the design to allow other manufacturers to produce as well. If companies cannot manufacture an enormous quantity we need, we search for other sources like Taiwan. The manufacturers in Taiwan are working in full capacity, but they are short in supply. The Japanese manufacturers consigned those operations, especially in the last phase, where we have to test the products. We utilize the same machines for testing so that our manufacturers in Japan can cover the last step of the production.
Japan's population is aging and declining with up to 28% of people already 65 and a fertility rate of just 1.37. It is expected that by 2060, there will be less than 100 million people, creating two issues. First is the shrinking domestic demand for products and companies are looking overseas for new customer bases. Also, with the competition between firms, recruiting talented salesmen, engineers and employees is becoming much more difficult. How is your company reacting to these population changes? What opportunities or challenges are these presenting you?
We started the midterm business plan this year called 5G&beyond-NE. Due to the accelerated aging population, we can expect the shrinking of the labor force in the future. The key element of our business plan is creating a system that does not rely on manpower like autonomous vehicles. I think Japan and other Asian countries have reached the phase of needing to shift to automation. The demands for products may increase or decrease depending on the item. The demand in the Japanese market is indubitably shrinking, but we predict the acceleration of Artificial Intelligence (AI) or Artificial Super Intelligence (ASI). In addition, the increase in the demand for production facilities or equipment to replace humans gives us an opportunity. Seeing that recruiting talents in the Japanese domestic market is challenging, so we are looking overseas to offset that shortage in young talents.
The automotive field is going through a once in a lifetime change with the switch to EV. In Japan, the Suga administration said that all cars must be EVs or PHEVs by 2035. Norway has already transitioned, and UK & Germany are following suit by 2025. This is a pivotal change for the automotive industry not only because there will be new technologies but the barriers to entry will be lowered. What opportunity does this present for your firm?
It is necessary to switch to EV considering the global situation of more players joining this market. Consequently, we are trying to expand our business to work with these players. Regardless if the cars are EV or not, safety of the vehicles is the priority. Safety requires more sensors, including infrared, cameras and lasers. Connectivity is requisite in connecting all these technologies. I think our technologies can help car manufacturers to realize their aim to reduce the number of wires and connections to have lightweight vehicles. We are looking to start from the Chinese market. We are replacing button-operated sensors to display systems such as gauge clusters or entertainment systems. With the demand for features such as high resolution, high speed and larger capacity, we are trying to provide technological solutions for the next generation of technologies.
Your V-by-One HS is an interface with a number of advantages over conventional ones. Can you explain to our readers about those advantages?
V-by-One® HS is THine’s original technology for flat panel displays which are requiring higher frame rates and resolutions. It offers variable speed from 600Mbps to 4Gbps, and with our original equalizer technology achieves high video signal quality and total cost reduction. V-by-1® HS technology has become the de facto standard for internal high-speed interface for 4K and other high resolution displays. Active optical cable (AOC) or Active cupper cable (ACC) systems are used to connect cables like optical cables. We need to increase the volume to be able to load more data into a cable. THine’s high-speed serial interface technology offers higher speed resolutions for USB4 interface which enables 40Gbps speed rate (20Gbps per lane).
In the development of semiconductor chips, Moore's Law dictates that the number of transistors will double every two years. Only 10 years ago, there was a trace width of 10 nanometers, now IBM has launched one that is two nanometers. It is estimated that if all data centers switch from seven to two nanometer processes, 43 million homes, energy power could be saved. As a company involved in this cutting-edge industry, how are you adapting to this fast-paced miniaturization?
The 2-nanometer and 10-nanometer are very cutting edge needed in the smartphone production, data centers and high-performance devices. However, our mixed signals do not require such cutting-edge technologies. Speed is important, but power is desired as well. Instead of focusing on the trace width, we pay more attention to the stable supply of products. Hence, we utilize 100-nanometer or 28-nanometer LSIs.
What are the synergistic benefits of purchasing Cathay Tri-Tech in 2018? Moving forward, what type of new partners or M&A opportunities will you be seeking?
We are trying to expand our partnerships through our connectivity services. We used to work on wired connections, but since we acquired Cathay Tri-Tech in 2018, we can provide cheaper, quicker, and lighter products and services, wired and wireless, because they specialize in wireless connectivity such as LTE and 5G modules.
Your company was only established in 1991, but you have come so far in such a short span of time. Technology companies' exponential growth is so fast. Which development or technical achievement are you personally most proud of?
Since we are driven by long-term profits, we want to seek more partners worldwide based on LVDS and V-by-One HS, though those are not cutting-edge technologies. We are proud of our participation in public, private and academic projects like the development of 6G.
Which international market do you see the most growth potential in, and where are you focusing your resources and efforts moving forward?
The Chinese market is our first target because of its huge population. Its car market is our main focus because the entry barrier is low. They believe that accepting something new is good. In contrast, it is very difficult to enter a new market in Japan because of bureaucratic procedures.
For the US market, we need to choose the best product that will propel our expansion. At the moment, we do not have a lot of sales in the US. Still, there are several start-up companies in the west coast from which we can form partnerships and synergistic effects. Although the American LSI is very strong, we want to establish a good relationship with Korea. We are looking at Taiwan to set up a production base and a research & development center to produce locally.
Imagine we come back on the very last day of your presidency and have this interview all over again. What dreams and goals would you like to have achieved by then for the company?
The connectivity field which has been our focus for a long time has been steady and strong. Nevertheless, we acquired Cathay Tri-Tech to grow our company further and get to the next phase. We do not have a specific or concrete idea right at this moment, but we are seeking a strategic development investment through M&As and other forms of partnership to create a new pillar of revenue in addition to our existing pillars.