This issue’s Executive Interview is with Arthur Tan, CEO of Philippines-based Integrated Micro-Electronics, Inc., also known as IMI, which was ranked #18 on MMI’s Top 50 EMS list. IMI is an example of a company that has evolved and adapted to changing and challenging global business conditions. We have known them a long time. They have become a highly technical global company specializing in high reliability electronics for long product life cycle segments such as automotive and industrial electronics.
For the automotive segment, IMI delivers customized solutions for safety and security, among others. It supplies cameras that are integral technology to the advanced driver assistance systems (ADAS). For the industrial segment, it manufactures security and access control devices, power modules, and building automation, among others. From its manufacturing plants in the United States, Mexico, Bulgaria, Czech Republic, Germany, China, United Kingdom and the Philippines, IMI provides engineering, manufacturing, and support and fulfillment capabilities to diverse industries globally
EMSNOW: Congratulations on the success of your operations in 2017. What are you most proud of about IMI’s growth and performance in 2017?
The year 2017 was a robust year for IMI. We have evolved through the changing world of electronics and its challenging environment, while never losing sight of the reason we are here: to serve our customers and our communities across the globe and to maximize value for our shareholders. We have become stronger and more focused with a clear vision of how we intend to develop the business over the coming years.
Last year was a milestone year for IMI as we broke the billion-dollar threshold and grew by 29 percent from the previous year. We ended the year with 19 manufacturing sites in eight countries. Total shareholder return — a measure that combines the change in share price plus dividends, reached 215 percent, outperforming the Philippine Stock Exchange index (PSEi) at 27 percent over the same period.
We have grown organically as well through further acquisitions, allowing us to move both vertically and horizontally in fast growing markets while increasing our presence in the world.
Each of our operations in the Philippines, Bulgaria, China, Czech Republic, Germany, Mexico, United Kingdom and the US continue to bring a unique, yet cohesive portfolio of capabilities and skillsets. Although each operation is successful on its own, the collective group is one of the key reasons our customer base is expanding and our value proposition world-class.
EMSNOW: IMI has successful operations in all major global regions. How do you view the outlook for global EMS in 2018? What are the challenges and opportunities for IMI in being a global company operating from the Philippines.
On the industry perspective, we see many EMS companies further expanding to higher value offerings. The use of technologies in the sphere of Industry 4.0 will become a powerful enabler, pushing the limits of manufacturing to reduce time-to-market. Robotics, automation and the industrial internet of things will be key trends that will drive these changes.
Our global operations are in line with the adoption of these technologies for flexible and customized scenarios at various levels depending on location, customer needs and resource availability.
With these trends, the industry faces challenges and competition in finding key people with the right technical and cognitive skills needed today and for the future. With the fast changing technologies, there is a need to train personnel with soft skills that can enable them to adapt fast and to make changes quickly while strengthening value offerings.
For IMI, although our headquarters is in the Philippines, we operate with a global mindset. Our different regional offices can operate independently to provide the requirements of our customers in real time. We know that communication must be kept simple and accurate. Best practices and risk analysis must be aligned for the success of any project.
EMSNOW: Specifically, what new opportunities do you see arising for IMI from the new facility in Serbia?
The Council for Economic Development of Serbia awarded the grant incentives for financial support of IMI Nis for the implementation of the investment project. The construction and operation of the production facility aims to manufacture electronic goods located in the city.
The realization of the project will facilitate further development of the Serbian economy that will contribute to the overall improvement of the country’s competitiveness as an investment location. The agreement stipulates that the period of investment will be from 2017 to 2026.
For IMI, the development of the facility is in line with the company’s strategy to strengthen its global footprint and to support the growing market for automotive components in the European region.
EMSNOW: What technological issues do you expect to be the most challenging for IMI and the EMS industry over the next few years, either inside the factory with automation/AI, etc. or from new markets for electronics, e.g. automotive?
The great demand from emerging markets such as ADAS or electric vehicles (EV,) where IMI has begun to play a major role, created pressure in components allocation that led to challenging sales and on-time delivery goals.
Another challenge is how to respond to the many new-comers in the electronics industry offering low-priced solutions to Tier 1 and OEM customers. IMI believes that in a technology-driven market, quality is of great importance because everything is ultimately used in safety applications. We can never compromise on safety and our commitment to quality in exchange for mere profits.
EMSNOW: IMI has made some strategic acquisitions, especially in Europe. These have both increased your EMS capabilities in certain sectors, and in the case of VIA Optronics, allowed you to expand into product offerings. How have these acquisitions reflected your strategic vision for IMI?
As the disruptions of today become the technologies of tomorrow, we will continue to strengthen our ties with our customers. Automotive is a very important segment for IMI. We believe that our recent acquisitions will enable us to support the activities and direction of our Tier 1 partners moving forward. As we come up with these building blocks to fulfill this goal, we are also strengthening our internal integration capabilities such as design, advanced manufacturing and test systems.
With the advent of EVs, our experience and expertise in these areas will become more vital.
EMSNOW: What is your vision of the future for the EMS industry and IMI specifically?
I am particularly excited by the investments we are making in growth areas such as displays and satellite communications. Our acquisitions of VIA Optronics in 2016 and Surface Technology International (STI) in 2017 are central to these technologies. Technologies such as mirror replacement systems in automotive, next-generation satellite communications, robotics and machine learning– these are important elements that IMI continues to build on as the digital environment of today revolutionizes the Human Machine Interface (HMI) systems of tomorrow.
EMSNOW: Is there anything else you’d like to tell our readers about IMI?
IMI will continue to expand and tap on new markets. With its mother company AC Industrials, under Ayala Corporation, new acquisitions and joint ventures in the near future will further enable IMI to grow and be a major manufacturer in key sectors in automotive, industrial and aerospace segments.