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U-Blox products are only fingernail size. Radio chips from the semiconductor company Thalwil are found in cars of the world’s largest manufacturers: Tesla and VW, Toyota, Mercedes, BMW, all rely on Swiss technology. So cars know where they’re going, especially if there’s no steering wheel anymore. Company boss Stephan Zizala assumes that “autonomous driving will offer very good growth potential above the growth of the semiconductor market.”
Even if few people know about U-Blox, you cannot ignore the Swiss company in many sectors: whether in autonomous driving, asset tracking in industry or cloud-connected blood pressure measurements. The company is a global leader in semiconductors for location services and connecting cars, robots, drones, cargo containers and medical devices to satellites floating in orbit. The company’s turnover last year was around 624 million francs. A secret champion.
From ETH to world events
The company originally comes from the ETH stable. U-Blox was founded as a spinoff in 1997 and went public a decade later. The price has doubled in a few years. A child prodigy in the Swiss capital market.
But in the last five years the outlook has blurred. The stock is a long way from its peak valuation in 2016 and has fallen further in 2023. After a record sales year in 2022, sales at U-Blox are down. And this is despite the fact that the market continues to grow: global sales volume of so-called discrete semiconductors, such as those produced by U-Blox, have increased in the last decade alone, now reaching almost $40 billion – and the trend is rising. But life got harder for U-Blox. What happened?
Company boss Zizala even had to announce a strategic change after a year in office: “We have decided not to develop any more mobile phone chips in the future.” The focus now is on positioning the chips. U-Blox will continue to produce mobile phone modules with chips from third-party providers, rather than with its own chips. Additionally, purchasing processes are being restructured.
U-Blox is the manufacturer of so-called “fableless”. The company does not have its own factory, but designs and develops products and has them produced by contract manufacturers. The largest production partner of chip production is the US company Globalfoundries, which has factories in Singapore and Dresden. U-Blox has modules containing multiple chips manufactured by Flex in Austria and Inventec in Malaysia. Other contract manufacturers include Taiwanese Apple supplier TSMC, as well as Qualcomm, NXP, Nordic Semiconductor and Infineon. All the elite of modern chip technology produce U-Blox chips.
A difficult year awaits us
It should stay this way. “We currently have no plans to start our own production,” says Zizala. The technological challenges are already great enough that things are not currently running as smoothly as expected, and research spending should not exceed 20 percent of sales. But that figure shouldn’t be much less, “because otherwise we won’t be able to maintain the pace of development, especially with R&D-intensive chips.” The semiconductor business is a balancing act. “2024 will be a more difficult year,” says the boss.
If there are disruptions in the supply chain, for example in times of Corona or during war, customers’ production lines occasionally come to a halt and orders from U-Blox decrease because others cannot deliver. The company maintains delivery at a slow pace, but components are kept in stock. If business picks up again with a delay, customer warehouses are so full that U-Blox will continue to sell but will not be able to reach its original order level. This puts pressure on sales and profits. If large customers like vehicle manufacturers are catching a cold, U-Blox is catching the flu.
Big debate in the USA
As if that wasn’t enough, U-Blox also found itself stuck at the forefront of the innovation war between the US and China. Americans do not want the Chinese to have the most modern technology. Anyone who supplies the best electronics to China is losing out to the United States. China is also a very large and important sales market. This is especially noticeable in data communications chips: “These are the subject of a huge public debate in the US right now,” says Zizala.
The responsible licensing authority, the FCC, is examining whether major Chinese rivals should be banned from various applications. Zizala says this has a lot to do with cybersecurity and delivery security. And with the question of how dependent a system-critical industry is on the potential constraints of a Chinese supplier. “We are well positioned here as a reliable Swiss company,” says U-Blox’s boss. “Customers are actively approaching us and asking where we produce our products and whether they have Chinese ingredients.”
This article was first published on the paid service of handelszeitung.ch. Blick+ users have exclusive access as part of their subscription. You can find more exciting articles at www.handelszeitung.ch.
This article was first published on the paid service of handelszeitung.ch. Blick+ users have exclusive access as part of their subscription. You can find more exciting articles at www.handelszeitung.ch.
The truth is that U-Blox has no production in China and only sources a small amount of materials from there. Its headquarters is in Switzerland and its development is in Europe. In this way, Zizala avoids the influence of the Chinese government on the products. But this comes at a price: “We are not as cheap as some Chinese competitors.”
GPS is for cows, not guns
But even more creative. U-Blox’s product range includes exotic products. For example, autonomous lawn mowers from Swedish forestry equipment manufacturer Husqvarna use GPS modules so that the robot does not mow flowers instead of grass.
Or they put GPS collars on the cows. This is beneficial for two reasons: First, you can save on fences and therefore on construction and maintenance costs. On the other hand, in case of animal diseases, you do not need to kill the entire herd because you can follow the movements of sick animals. Animal researchers are using U-Blox to track penguins in Antarctica, where mobile communications are poor and beekeepers can now count bees via the cloud.
The company’s technology has many possible uses. In 2022, the British discovered the company’s GPS modules in drones sent from Russia against Ukraine. However, Zizala explicitly excludes weapons from its business model in contracts. “That’s why we prefer to work with rescuers and fire departments.”
Due to portfolio quirks, Zizala probably won’t be able to provide business for the chip company. But behind these applications lies the big future market he is betting on: the deployment of technologies in cars and factories.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
