SPS 2023 Martin Cotter discussing Intelligent Edge automations.

Good morning Rene, nice to meet you.

Well, Analog Devices, when you look at the world as it is now, we have our history on analog technology and analog components, and it's becoming more and more important as you see the real world being instrumented much higher information. So really, we are the company of the intelligent edge. We do everything in terms of real-world interaction, real-world interfacing. $1 billion sales. But all of the technologies that you can imagine in terms of measuring, sensing, precision, high speed, power. So our role in the world is to power the intelligent edge. When you look at this world of AI and new digital factories, that's very much our world.

Ah, that's a good topic. You look at everything that's required by industry. Traditionally, industry was what we might call a sneaker net: you had a person walking around with a tablet looking at what the pressure, temperature of the different technologies in a process might be. Now you have a world where you have to have a real-time model of the factory to drive higher efficiency, to drive more efficiency of power usage. We're all concerned about the future of the planet. And you look at things like reshoring, making sure you get more productivity. Industry has been phenomenal over the last three decades, gone from about $100 to about $500 per person in terms of productivity. So it's a very interesting time when you see how the intelligent edge, how the measurement and data at the edge, is driving this huge efficiency. We need it more and more when you look at the future of the planet and sustainability.

It's very interesting. If you look at how energy is used in the world, about just under 40%, 37% of energy is used in factories. About another pretty much bringing it up to 50% is used in factories and buildings. So as we deploy these intelligent edge technologies, they're all about getting more out of the same energy or less energy. A very simple example is a motor. A motor system accounts for about 70% of the energy in HVAC systems and how you power a factory. Making a motor more efficient is a big plus for the planet. So we need to get twice the efficiency out of every joule of energy that we use today, and that is the best chance the world has in driving to the 1.5 degree climate accord.

So that's what our goal is. Our purpose is to drive health of person, health of planet. My job at industrial is really health of planet in a lot of ways. So it's about how we drive with our companies, a lot of companies here at the show, large industrial companies, how we drive higher output, higher efficiency, less waste. This is all to that bigger goal.

It's really important. You take something like, everybody talks about the importance of semiconductor and going to things like AI systems with huge data centers, or you look at the need for advanced test equipment needing better use of energy. Getting a couple of more percent efficiency on power management drives a direct efficiency in terms of the overall energy of the data center or the factory or wherever it might be. So we can, with some of our solutions with silent switching technology and higher efficiency of power conversion, taking out some inefficient power stages, architectural changes, we can drive a couple of extra percent efficiency. Motors is probably even 15% more efficiency we can get from better management of the system of the motor and of the power of the motor. So it's huge.

The world of automation is going after every piece of efficiency. So automation is a digital factory. That replaces what used to be that person walking around with a clipboard with always-on, real-time representation of the factory. You see it everywhere at the show: people talk about digital twins. What does this mean? It really means that instead of having once per day sample of what's going on with the factory, you have constant real-time data that represents maybe a motor that's not as efficient as it should be, balanced to the load. It could be something that saves energy throughout the whole use of the plant. So it's a huge impact in the difference it can make. It's got an element of higher data for the factory. So we would say the connect piece of it goes to gigabits instead of kilobits. Everything is digitally switched whereas before it was manually plugging big cables and pushing them. And of course they're complex signals. And then of course the edge, the intelligent edge, is instrumented, so a lot more measurement at the edge. It's predictive. So we couldn't talk about anything without the word machine learning and AI. The future will include artificial intelligence and machine learning so that instead of training everything to be suboptimal, it will be able to adapt itself to the optimal load. For example, I'm using the motor a lot, but let's use the motor again: the optimal load of the motor. So you're extending the life of the technology and the industry, you're making it more efficient, you're basically making a greener planet also with better economic output.

Co-creation is really looking at the problem of the customer at an architectural level. We have many, many customers that have realized that semiconductor can now do more at the end application than would have traditionally. There was a time when semiconductors really were components that somebody who was maybe in the job for 30 years put them together with a little circuit. Now it's the world of software-defined. So of course, companies like Siemens, ABB, Schneider would all have bought digital assets and expect to be able to get at the end application. So we're finding that many of the automotive customers wanting to build a more efficient factory now would come to us with these larger industrial companies to make the end goal more efficient, because the semiconductor can now get at that end performance. Very simple example is gigafactories. People are building factories for batteries. So each of them needs to be gigabits of data, it needs to be fully digitally controlled, and it needs to have much more edge-based instrumentation to make less waste of the battery. So things like formation of the battery takes a long time, 20 hours. Believe it or not, it takes 20 hours to form a battery. So doing it with technology that's faster and more precise can make that factory much more efficient. So these are the kinds of problems that we need to solve. We can't solve them alone. We need our partners and we need the end users. So now they come work with us in Catalyst after these specific problems. That's beside our R&D plants or our R&D engineers together with the end users. It could be one of the car manufacturers, it could be one of the industrial partners. We solve together a particular problem full-time instead of occasionally going to meet. Now they work full-time on the same problem. So real progress much faster.

Catalyst comes from the word accelerate, right? So it's an accelerator. And what it is really is an accelerator of adoption of new technology. Semiconductor is extremely powerful in what it can do. Every 18 months, the processing in the semiconductor still doubles, Moore's law. But when you put together at the system level and get the benefit of the system-level architecture of, let's say, a power design together with a signal processing design, getting after something that is the output of the factory, it's extremely powerful. So it might be a robot that needs to have much better precision of control to do a special machining. So it takes what's inside the silicon together with the system knowledge together with the end user to do this. So it's really solving the toughest problems that are the highest value together with the value chain of each of the people in the value chain that matter. It's very exciting.

We have many, many examples. Let's see, I'll pick two. One is on, everybody knows about EVs, so electric vehicles. Battery systems are critical. We had a new technology that typically would be very slow to be adopted called wireless battery management systems. What it does is it takes a huge wiring harness out of the car but with the same robustness of connectivity and control. It allows us to wirelessly manage it, so it means all of the battery systems are much more modular. Lots of our automotive customers, General Motors were very public, they've announced it publicly that they want to adopt this new technology much faster because it gives about 20% extra range in the car with that and the better precision of control of the battery. So they brought a team to Catalyst, work with us, prove that this is very robust on all these conditions, and of course the technology now is adopted probably two years quicker than it would otherwise have been. So that's one example. An industrial example would be Johnson & Johnson wanted to do much more customized robotic manufacturing for healthcare. In that case, they would have come to us with their engineers, worked on a new robotic answer with this sense AI technology that we have to drive again the future of robotics for healthcare. That would include companies, Mittelstand companies in Germany like SICK and others. So it's a village of innovation. So we bring ourselves, the end user, and then others in the value chain together to do something much faster than would be done otherwise. So it's probably each time maybe two years faster adoption of technology than would otherwise be possible.

It's all about making sure that we drive this purpose. I think everybody personally connects to this. All our engineers, it's the one topic I keep getting asked about. We are doing it from our own carbon footprint, driving net zero. So we feel very responsible ourselves in terms of what we do, but the biggest impact that we make is the impact of our technology in getting higher efficiency. So that's two ways. One is industrial: we have a goal of enabling 2x efficiency of every industrial and building that 50% of the energy. You have to make that twice as efficient, and a lot of our investments are based on that. Secondly, we realize that to get to net zero, you need to have a replacement of fossil fuels with cleaner energy. So our team on EV is very much part of a 9x increase in use of green sources of energy. So it's actually a very large part of ADI's business already, about 30%, and we see it growing over the next five years to become a bigger portion of ADI's revenue because it's an area that thankfully there's a lot of capital investment also coming into. So it is the world of the digital factory is very much connected to the world of higher efficiency of industry, which is a lot of capital coming into new factories for semiconductor with chips acts, new factories for EVs, but also taking old brownfield factories and making them more efficient. So I think we see this as the biggest investable theme in industrial, and I think our customers very much align with that. It's a huge topic in Europe.

It's a great question. I think one of the things that I get a lot of satisfaction out of is when we enable one of these digital factories, you get high output, it's lower energy, and in many cases you're replacing. I think we looked at the journey of a simple screw, right? So it travels 20,000 miles around the world between getting made in China and coming back to going into a subsystem in China and then coming back to a bigger system somewhere else on the planet. This is not efficient. So I think many of the investments are aimed at a very big efficiency of purpose. We have 8 billion people on the planet now, but yet there are too few skilled people in industries, right? So I think we should embrace technology to get to that future that is much greener, much more efficient. It is a world of the intelligent edge. It will be a world of much more intelligence, AI systems, adaptable systems at the edge. And I think it's going to be a much better result for the planet than the global structure that's there now in terms of industries. So yeah, you're right. I think it will result ultimately in fewer factories, but they'll be much more efficient, and I think much higher output.

Well, we're very excited by it, Rene. So thank you very much for your time, and look forward to the rest of the show.