CEO Conversations XVIII: Steve Chen, General Manager of Corporate Administration, WIN Semi (3105 TT)
In the 20 years since the establishment of WIN Semi, gallium arsenide (GaAs) has become the mainstream technology for radio-frequency front-end components, and WIN Semi has developed into the industry’s No. 1 player, with technological capabilities that are far ahead of competitors. Its share of the global GaAs foundry industry is over 75% and the company is regarded as “the TSMC of the GaAs foundry industry.” The company has also delivered eye-catching growth. From 2015-2020, revenues reached a new record high for 6 consecutive years, reaching NT$25.5 billion (US$865 million) in 2020 and growing at a 17% CAGR. This has attracted global investors, driving its market cap to US$5.1 billion, from only US$780 million at the beginning of 2015.
In addition to delivering outstanding financial performance, WIN Semi has spared no effort in strengthening corporate governance. In 2020, 58 companies in the global semiconductor and semiconductor equipment industry were invited to participate in the Corporate Sustainability Assessment (CSA) for selecting the constituents of the Dow Jones Sustainability World Index (DJSI World Index). Of these 58 companies, only 7 were selected as DJSI World Index constituents: ASE (US$17.6 billion market cap), ASML (US$268.2 billion), Infineon (US$49.4 billion), STMicroelectronics (US$33.1 billion), TSMC (US$555.5 billion), UMC (US$23.9 billion), and WIN Semi. For a company with a market cap that is less than 1/3 of the smallest semiconductor industry constituent chosen, this is a major accomplishment. It also demonstrates that WIN Semi has now joined the giants in the industry as a world-class leader in sustainability best practice. The key to this success is in building a corporate culture that is supportive of ESG from the top levels of management down. As we sit with Steve Chen, WIN Semi’s General Manager of Corporate Administration and Chairman of the Corporate Social Responsibility Committee in the company’s global corporate headquarters in Taoyuan City, he shares the story of Win Semi’s success with us.
“Continue to execute, and one day you will be recognized by the world.”
Says Steve, “We began building a company-wide culture of ESG best practice several years ago. We formalized the effort by setting up our Corporate Social Responsibility Committee in March of 2016, and by publishing our first ESG report that same year. Early on in our development, I have to admit that we focused primarily on how to improve operational efficiency and on gaining a technological edge on our competitors. However, as the company grew into the world’s largest GaAs foundry, we became more aware of the resources we consume and our impact on the environment. So, we began to look for ways to reduce our ecological footprint and how to best manage our business in terms of ESG considerations. An increasing number of our customers are starting to pay attention to these issues as well.”
Steve recalls, “We were invited to participate in the DJSI Corporate Sustainability Assessment for the first time in 2016. Our market cap at the time was only US$1bn, and I remember feeling that we were at a significant disadvantage to larger players in the semiconductor industry, who can devote a lot more resources towards ESG efforts. But, we decided to move ahead with the effort anyhow as we felt that the assessment would provide us a good roadmap for improvement for all three aspects of ESG -- environmental, social, and governance. We also felt it would give us the opportunity to review and upgrade our operations management capabilities and provide a methodology with which to identify and manage our risks and opportunities in the area of ESG.”
“When we first started this assessment, due to resource limitations, we aimed to take things one step at a time. At the beginning of each year, the CSR committee would set goals for the year that we saw as achievable. In this way, we made some progress each and every year. It was very encouraging to be added to the DJSI World Index in 2020. Perhaps we can be an example to other companies in Taiwan. No matter how small you are, if you want to achieve lasting improvement in the area of ESG, just set goals and continue to execute, and one day you will be recognized by the world.”
This attitude is very indicative of the WIN Semi spirit in all areas of its business, whether that be driving excellence in operational efficiency, extending its technology lead or instituting a systematic ESG initiative, "When WIN Semi commits to achieve a goal, we will achieve it." Steve says firmly.
Win Semi is focused on reducing the intensity of gas emissions and water & electricity consumption
As WIN Semi continues to expand its production capacity, how to use of resources more effectively becomes a critical topic. Steve says, “We are a compound semiconductor foundry in Taiwan, and the efficiency of our water and electricity usage are of critical importance. Each year, our engineers and the CSR committee meet to examine all the data and try to find better solutions. For example, when developing each new generation of technology, our R&D team will take material and resource efficiency into consideration to minimize consumption. Our facilities team also works to make water and electricity usage more efficient and raise the percentage of our material resources that we recycle each year. These are areas where we are continuously trying to improve.”
Steve further adds, “We also face other environmental challenges such reducing emissions of volatile organic compounds (VOCs) and perfluorinated compounds (PFCs) and employ a two-pronged approach to address them. First, for existing fabs, we not only look for new equipment that can help reduce overall emissions, but also review all existing processes with an eye to making further reductions in emissions. Secondly, when building new fabs and new clean rooms, our facilities team communicates with equipment vendors in an attempt to design in new equipment and new processes that have lower levels of emissions.”
Integrating innovation into Win Semi’s corporate culture, and creating sustained technological leadership
Since its beginning, WIN Semi has been committed to integrating innovation into its corporate culture. Steve points out, "As a foundry, we compete with global integrated device manufacturers (IDMs) for the business of the top IC design houses. To maintain technological competitiveness, on top of continued investments in research and development, innovation has become a necessary part of our culture. Without a culture of innovation amongst all of our employees, it would be very difficult to maintain our competitive edge.”
Steve elaborates further, "In order to make innovation become a company-wide activity, we have held a six-month long ‘Innovation Crunch’ in recent years. During these six months, we hold various courses, contests, seminars, sharing sessions, interactive Q&A, and voting activities. Every employee of the company is encouraged to participate, making innovation not only the responsibility of our R&D team, but also the mutual goal of our operations, facilities, IT and HR teams. We divide the scope of innovation into different categories, and each employee can put forward innovative ideas to improve the company’s technological capability and operational efficiency, to expand our business opportunities, or to provide better customer service. Any idea that can help the company to innovate better is welcomed. The event is now in its 9th year and the number of employee proposals increases every year. At our 7th ‘Innovation Crunch’, more than 100 proposals were put forward, and last year, more than 550 employees participated the event. You can see from this that innovation has indeed become an integral part of our corporate culture and our employees’ DNA.”
Steve continues, “A happy employee is an innovative and productive employee. Over time, we have come to see our staff as our most critical asset. So, employee retention has become a key focus. In addition to profit sharing, we also have an employee trust, childcare allowances, and other employee benefits. I truly feel that these efforts have helped to make Win Semi feel like one big family. And the results show it, our employee turnover rate has shown steady improvement. In 2016-2019, employee turnover ranged between 5.9% to 8.2%, much lower than 2015’s 11.4%.”
Setting up new facilities in the Southern Taiwan Science Park to prepare for tomorrow’s growth
In addition to setting a record high in revenues for each of the past six years – on the way to a 17% top line growth CAGR – WIN Semi has also delivered outstanding bottom line performance with a 6-year average ROE of 17% and a net income CAGR of 22% during the same period. Says Steve, "Near term, we expect cellular power amplifiers (PA) to be one of our strongest growth segments. There are three reasons: First, we have a clear technology lead over our peers in the 5G PA space. Second, the major China-based IC design houses other than Huawei are mostly all Win Semi’s customers. Third, Chinese cellphone vendors are actively promoting 5G smartphones this year in the domestic China market. Longer term, in addition to 5G cellular PA, we expect multiple demand growth drivers for compound semiconductors, including Wi-Fi 6E, massive IoT, satellite communication, and LiDAR.”
Steve continues, “This robust long-term outlook for growth in demand is why we announced our plans last year to invest in the Southern Taiwan Science Park in Kaohsiung. Compound semiconductors cover a wide range of technologies and product applications; and our customers are mostly tier one IDMs and design houses whose fab certification process takes 1-2 years. So, although we still have one whole story of additional space in Fab C to expand capacity, we must take the long-term view when planning for our future capacity requirements. We have secured a 9.7 hectare plot of land, which is large enough for several additional phases of expansion. Once our customers have qualified the first fab at our new site, we’ll have the flexibility to expand production capacity according to customer demand. We’ll begin construction on the first fab in the middle of this year, and our ultimate goal is to construct three to four buildings on this land over the next ten years, to ensure that we can fulfill customer demand and to lay the foundation for our future growth.”
If you would like to arrange a meeting with WIN Semi’s General Manager of Corporate Administration Steve Chen, please contact yvonne.huang@qtumic.com.
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