Published on August 31st, 2012
With its strategy in place, Switzerland’s Swissbit AG is moving towards its next growth phase.
Swissbit - Europe’s largest independent producer of industrial DRAM modules and flash storage products - is expanding its production capabilities, moving into new product markets, and boosting its distribution channels.
As part of its product efforts, the company is expanding its traditional DRAM module and flash storage portfolios. It is also developing a new solid-state drive (SSD) line, as well as pushing a flash-storage product based on the new and emerging CFast standard.
Within its product markets, Swissbit is sticking with its current strategy. Generally, the company focuses on the embedded and industrial markets, which require high-quality solutions and various levels of customization. “We specialize in the low-volume, high-mix environment,” said Vincenzo Esposito, co-founder of Swissbit and president of Swissbit North America. “I believe many of our competitors are not set up this way. They have difficulties in handling the variations and the customization of the products.”
Swissbit’s chip-on-board (COB) technology enables cost-effective solutions (Source: Company)
The company is also bucking a trend. Many electronics firms have moved their production to low-cost labor sites in China. In contrast, Swissbit differentiates itself by combining the design precision of Switzerland with the manufacturing expertise of Germany. “Everything is designed in Switzerland and manufactured in Germany,” said Esposito, who is also the director of strategic procurement of DRAM/Flash at Swissbit. “This has a good ring to it if you are in the high-reliability embedded and industrial markets.”
Jim Handy, an analyst with Objective-Analysis, a research firm, said that Swissbit is well positioned in the market. “The industrial market has lower volumes than the commercial market,” Handy said. “On the other hand, the margins are higher and there is less competition.”
Privately held Swissbit also faces some challenges. It competes in a large but fragmented market against Smart Modular, Viking, Western Digital and others. In addition, there is a slowdown in the overall electronics and memory markets right now. But with its focus in the relatively stable industrial sector, Swissbit is somewhat insulated from the current cycle.
Swissbit’s roots can be traced back to German industrial giant Siemens. At one time, Siemens competed in the IC and DRAM markets. In 1991, a unit within Siemens’ DRAM business began to sell memory modules.
Swissbit’s headquarters in Bronschhofen, Switzerland (Source: Company)
Then, in 1999, Siemens spun off its DRAM components group into a new company called Infineon. (In 2006, Infineon spun off the DRAM unit into an entity called Qimonda, which went under in 2009.)
Then, from 1999 to 2000, the separate DRAM module unit within Siemens opted for a management buyout, thereby forming a new and independent company called Swissbit.
Shortly after its official formation in 2001, Swissbit acquired Optosys, based in Berlin, Germany. With Optosys, Swissbit entered the CompactFlash card market. At the time, Optosys also competed in the retail channels against Lexar, SanDisk and others.
In 2006, Swissbit changed its strategy amid competitive pressures in the retail sector. At the time, the company exited the retail and consumer markets and decided to focus on embedded and industrial, recalled Esposito, who originally joined Siemens’ former DRAM unit in 1989.
Swissbit’s move to focus on the industrial markets has paid off. The company, which has 150 employees, has emerged as a major supplier of DRAM modules and flash storage products. It sells products in various and diverse markets, such as automotive, embedded, industrial, medical, military and networking.
“The industrial businesses are growing and the markets are steady,” said Greg Wong, an analyst with Forward Insights, a research firm. The challenge in industrial is to meet the stringent reliability requirements from a diverse customer base, Wong said.
With that in mind, Swissbit has put the infrastructure in place to not only meet those rigid demands, but also to deliver custom and semi-custom solutions. “We’ve been a success story,” Esposito said. “But it’s different than the consumer market. There are so many vertical markets. And our market is low-volume but high mix. For instance, a typical customer is buying maybe 5,000 to 10,000 products a year. It’s not one big customer who wants a million pieces.”
New growth phase
The industrial sector is still growing, thanks to demand in Asia, Europe and the U.S. As a result, Swissbit is preparing for its next growth phase on several fronts. For example, within its two production facilities in Germany, Swissbit is capable of producing 500,000 products per month. To meet future demand, the company is putting the infrastructure in place to produce over 1 million products per month.
One of the company’s key production capabilities is a chip-on-board (COB) technology. COB involves mounting DRAM or flash dies directly on a substrate and connecting them by bond wires to the PCB without the need of a packaged component. COB technology enables more compact and energy efficient modules and cards, according to Swissbit.
On the sales front, meanwhile, Swissbit over the last year has signed separate distribution agreements with Arrow, Digi-Key and Redtree. The deals will enable Swissbit to expand its presence in Europe and the U.S.
And in another part of its strategy, Swissbit continues to expand its product portfolio in two basic categories: flash storage and DRAM modules. In flash storage, it sells cards based on the CompactFlash, SD and CFast standards. “Our CompactFlash card business is growing, because other vendors are getting out of it. There is also growth with the other form factors,” Esposito said.
The company sells SSDs for the embedded and industrial markets. It is also currently developing a new SSD line with 256- and 512-GB capacities, based on single-level-cell (SLC) NAND and the SATA-2 interface. There is also an option for multi-level-cell (MLC) NAND.
In addition, the company is also making a major push in CFast, mainly for the industrial markets. In May, it rolled out the F-200 series, a CFast flash card line with capacities up to 64GB.
The relatively new CFast interface standard is based on the SATA bus, rather than the Parallel ATA/IDE bus used in CompactFlash. SATA supports transfer rates up to 600MB/s, while PATA is limited to 133MB/s. In April, the CompactFlash Association (CFA) rolled out a faster version of CFast, dubbed CFast 2.0, which supports the SATA-3 specification.
Swissbit will mainly focus on selling CFast products based on SATA-2. “CFast is a good alternative to CompactFlash. It's faster and has more of a future,” Objective-Analysis’ Handy said.
Still, CFast is in its infancy and the technology has just begun to gain traction. “We think it will capture market share, but everything moves slow in my markets,” Esposito said. “One of the big obstacles for CFast is that the ecosystem isn’t mature. But companies like JST and 3M are building connectors for CFast. Once the ecosystem starts to mature, the acceptance for CFast will grow.”
Meanwhile, Swissbit has not forgotten its roots in the DRAM module business. It recently rolled out new DDR2 and DDR3 DRAM modules for industrial and related applications.
“We concentrate on specialized applications,” Esposito said. “The majority of our business is legacy products. We still sell a lot of DDR1, DDR2 and even SDRAM.”
Over the next year or two, Swissbit expects to see more demand for DDR3 modules in industrial applications, he said. In modules, Swissbit sources DRAMs from various memory vendors.
And as before, Swissbit does not compete in the commercial PC and tablet segments. “That market belongs to Samsung, Micron and Hynix. I don’t want to compete with my memory vendors. That’s the golden rule,” he added.
Mark LaPedus has covered the semiconductor industry since 1986, including five years in Asia when he was based in Taiwan. He has held senior editorial positions at Electronic News, EBN and Silicon Strategies. In Asia, he was a contributing writer for Byte Magazine. Most recently, he worked as the semiconductor editor at EE Times.