By Tom Foremski for SiliconValleyWatcher

During my recent lengthy apartment/office move, I took a break and went to the Infineon Technologies media/analyst conference in Sonoma. Infineon, a founding sponsor of this site, attracts a decent-sized crowd to this annual event.

It is held at Infineon Raceway, one of the premier automotive racetracks in the US and just 40 minutes north of San Francisco.

The media and analysts are invited to listen to a few hours of presentations, updates from Bob LeFort, president of Infineon USA, and panel discussions on current issues from Infineon and third-party experts.

It's a quick and effective way to catch up with what the largest European chipmaker is doing, and the issues and trends that affect its business strategies.

Hot Laps

And then after lunch, Infineon invites everyone to play on the racetrack in a variety of motor sports events, including the opportunity to do "hot laps" with Mario Andretti.

This means sitting next to the seven times world champion race car driver as he barrels at incredible speeds into impossible turns in a racing Porsche GT3 Cup car. Seeing this racing legend work his craft at such close range is very very impressive.

[Last year, Nathan Brookwood, Insight 64 microprocessor analyst, had an interesting experience with Mr Andretti. As they came into a turn, one of the wheels fell off, and rolled right ahead of them(!) Mr Andretti maintained complete control of the car and within a few minutes he was back on the track with all four wheels, and plenty of eager passengers waiting in line.]

Automotive chips--Silicon drivers

My regular contacts at Infineon USA are Christoph Liedke, and his boss Gerhard Zimmermann of the comms team, aided by Mansi Agarwal. I met Christoph and Gerhard several years before Infineon became a sponsor of this site, when I was covering the chip sector for the Financial Times.

To Wall Street and many others, Infineon is viewed somewhat plainly, as Europe's largest chipmaker, spun out of Siemens, the German industrial and engineering conglomerate.

It is one of the world's largest memory chip manufacturers, but this is not always a welcome accolade. That's because memory chip markets have notoriously low margins and follow a brutal business cycle marked by long bust periods and very brief boom periods.

And that is why Infineon is pushing into higher margin chip markets such as automotive chips, a market in which it dominates in Europe but lags in the US. Which is why it bought the the ten year naming rights to Infineon Raceway, formerly known as Sears Point Raceway.

Now in its third year, it has been a very good move for Infineon. The popularity of motor sports in the US has grown tremendously over the past few years. And the venue has hosted NASCAR and many other national and international racing events, helping to associate the Infineon brand with high performance automotive technologies.

Infineon's controversial CEO

Infineon came alive for me when I first interviewed its CEO, Dr Ulrich Schumacher. He was one of Germany's most prominent business leaders and on a meteoric career path -- a business wunderkind.

He was the youngest ever director at Siemens, one of Germany's largest and most respected companies; and when Siemens decided to spin-off Infineon Technologies in April 1999, Dr Schumacher presided over a very successful IPO at the height of Germany's dotcom mania.

Infineon, within Germany, represented the crown jewel of the country's tech boom and it became one of the most widely held tech stocks in Germany.

Dr Schumacher was very much in the public eye and he used that position to push for reforms in German laws that burdened German companies in global markets. And he gladly tackled the hard cultural battles within a society that doesn't tolerate mavericks very well.

What began to fascinate me about Infineon was that it was a new company emerging from a large and well established parent. And it was trying very hard to shed the old business culture and old ways of thinking prominent in the German business community.

Escaping Munich

Dr Schumacher recognized that Infineon must become a global chipmaker, not a German or European chipmaker. He would sometimes hold board meetings in different locations around the world to encourage a global perspective within the company.

I remember asking him what brought him to San Francisco one particular time. He said he had just had a company board meeting in Napa. "I have to have an excuse to get these guys out of Munich some of the time."

He also wanted to separate as much as possible from Siemens, and worked hard to reduce Siemens' stake in the company and its majority control, which he felt sometimes restrained Infineon's abilities to manage its business within very tough chip markets.

Alliances not acquisitions

Dr Schumacher pursued a very savvy business strategy, establishing numerous manufacturing partnerships with other leading chipmakers, such as IBM. This spread the capital investment risk, and it enabled Infineon to co-develop leading manufacturing processes and technologies.

And Infineon was very conservative in its acquisitions, avoiding large deals but happy to help bid up the price of acquisitions targeted by rivals.

The low margins in the memory chip business also forced Infineon to become highly disciplined and cost-efficient in its manufacturing, which it then applied to its other chip products, improving the profit margins on those lines.

Outspoken payback

Mr Schumacher trod on many toes during his tenure at Infineon. And his outspoken opinions and attempts to limit Infineon's exposure to European labor earned him the enmity of German trade unions and many others. He resigned from Infineon in March 2004 during a board meeting.

Dr Schumacher's strategy and culture still continues at Infineon. And the company maintains a strong presence in Silicon Valley with several thousand workers in San Jose and other locations in the US.

It's not just the talent pool in Silicon Valley that Infineon benefits from, but also from the the region's culture of entrepreneurship, risk taking, and innovation. I've seen such associations with Silicon Valley transform companies and they are very important, more important than we sometimes realize.

Where were you?

Infineon's sponsorship of SiliconValleyWatcher shows it is a stalwart supporter of innovative approaches, and keen to explore the opportunities emerging from the use of innovative/disruptive media technologies such as blogging. And it has been willing to experiment with the medium directly, establishing InfineonWatch.com.

But it has not been easy sailing for Christoph Liedke and Gerhard Zimmermann, who have had to step out on a limb with their support of SiliconValleyWatcher. The chip industry has slipped into yet another downturn, and they have smaller budgets and have had to face questions about their support for "blogging" type media publishers.

Obviously, I think Infineon's money is well spent and the association with SiliconValleyWatcher is helping both parties build our brands in mutually positive ways.

Plus, what excites me the most, is that we all get to be part of an amazing phenomenon that is changing the global media sector; and it will lead to some very profound and historic changes in our global society, some of which we cannot yet predict. And we will be able to say to our grandchildren: "I was there." imho.

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[Infineon is listed on the DAX 30 index of the Frankfurt Stock Exchange and on the New York Stock Exchange (ticker symbol: IFX).]