Alper ÇALIK / firstname.lastname@example.org
Nero industries has taken the decision to make new investments in Turkey in the field of semiconductor sensors, and the Presidency of the Republic of Turkey has included a 1.6 billion Turkish Lira share of this planned investment in the project-based incentive system. This will allow Nero Industries to further strengthen its position as Turkey’s “reliable system supplier” in the defence and aerospace sector. We spoke to Alican ÖKÇÜN, Chairman of the Board of Nero Industries, about the latest developments following the publication of the relevant Presidential resolution in the Official Gazette on 20 April, and about the details of the project.
MSI TDR: Mr. Ökçün, what kind of feedback did you receive after it was announced that your investment was to be included in the project-based incentive system?
Alican ÖKÇÜN: First of all, this development has created significant reactions on both Turkish and foreign companies. We are sure of this, as our phones have not stopped ringing since the investment decision was announced. In addition to congratulatory calls, we have received many calls from companies seeking to cooperate with us. From the United States alone, we have been contacted by around 10 companies who have declared an interest in being part of the ecosystem that we will create with this recent investment. Likewise, four different companies from Switzerland have asked to cooperate with us. We had already set out along this path with considerable motivation, but these beautiful requests for cooperation that we have received have provided us with all the enthusiasm we will need on this difficult road.
MSI TDR: Can you tell our readers why this investment is so challenging, and why is it so important that it requires government support?
Alican ÖKÇÜN: The difficulty of our investment lies both in the technology and economy of this business. First of all, I must say that the area of semiconductors requires a great deal of expertise. Although it is possible to produce these products under laboratory conditions, things change when it comes to serial production, and profit margins in the sector are very low.
While we are capable as a country of producing high-tech products, we are still foreign dependent when it comes to semiconductor sensors. Although various attempts have been made to address this issue in Turkey, the desired results could not be attained in most of them as the targeted production figures were very low in almost all of those attempts. We, on the other hand, aim to produce approximately 100 million sensors every year once our investment reaches full capacity. This is what lies behind our strategy, and this is what will bring us success. That said, we do not really expect much financial gain. I think these are the main reasons behind our government’s decision to support us in this way.
MSI TDR: At this point, the question “Why is Nero Industries making such a difficult investment in a sector with such a low commercial return?” comes to mind. What would you like to say on this subject?
Alican ÖKÇÜN: There are two reasons behind our decision. The first is that we feel indebted to our country. As Nero Industries, we have left many difficulties behind us, and throughout this process, we have always felt the support of our state and our prime contractors. In this sense, we feel indebted and want to take every opportunity to do something to repay our debt.
The second reason is the ability of Nero Industries to take risks. For example, Nero industries is the organisation that designed and produced Turkey’s largest sand test chamber for Standart Test, its sister company. In addition, we are a company that has managed to indigenise many of the subsystems required by the defence and aerospace sector, and that has expertise in many different disciplines. These competencies give us the ability and power to take risks. In brief, we saw the need of our country in the field of semiconductor sensors, and we did not hesitate to take steps in this regard.
MSI TDR: Following this investment, what will be Nero Industries’ standing in the sector?
Alican ÖKÇÜN: We are one of the most reliable subsystem suppliers in the Turkish defence and aerospace sector. With our new investment, the local participation rate in our products will increase; our lead times will decrease even more; and we will further strengthen our position as the reliable supplier of the defence and aerospace sector. In addition, the sensors we will produce have a wide range of use also in a number of civil sectors. With our high-quality sensors, we will not only meet the needs of Turkey in this field, but also will become a global player based on our new business model, which envisages annual production of 100 million units.
“We Will Blend the Experience Already Available in Turkey”
MSI TDR: How will this investment shape the ecosystem of Nero Industries?
Alican ÖKÇÜN: Regarding our ecosystem, I can say that we will not have any problems in terms of trained personnel, as currently almost every university in Turkey has a semiconductor laboratory in which nearly 100 trained personnel are working, and they have long dreamed of a company that can serve as a national umbrella organisation. To realise this dream, we will create an ecosystem of around 500 companies, and will increase the number of personnel from 100 to 2,000. In this way, we will blend the experience that is already available in Turkey in the field of semiconductor sensors, and create a reverse brain drain by bringing precious people to our country from abroad.
MSI TDR: Can you share with us some information on the experience of Nero Industries in the field of semiconductor sensors?
Alican ÖKÇÜN: As in every relevant company, there are R&D and P&D departments at Nero Industries, but unlike in other companies, we also have an “Advanced R&D” department that designs the products and components we will need in the next five years. This department, which carries out its studies in a 400 square metre clean room within our company premises, started two years ago to design semiconductor sensors for our products such as ARES, MARS and UMAY. In addition, we have completed the design of approximately 400 sensors that we will produce through serial manufacturing methods after the completion of our new investment, also in this clean room. We can even make small-scale productions in this clean room, however such efforts do not turn out to be very cost effective. As I have already mentioned, if you want to reach sustainable success in this field, you must target large-scale production.
One US Company and One Swiss Company Acquired
MSI TDR: What steps have you taken since the investment issue became concrete?
Alican ÖKÇÜN: There are already many institutions and organisations that have voiced an interest in cooperating with us. We are in talks with them, and have even signed agreements with some on various issues. Within the scope of the incentive, we received ₺100 million in financial support at the outset, and we are using this resource for company acquisitions and for the recruitment of new personnel. So far, we have acquired a US company working on semiconductor sensor designs and a Swiss company that produces machines used in semiconductor component manufacturing. We are also in talks with six companies in Turkey, including manufacturers of serial production machines. We will gain considerable competencies, especially if the talks end up positively with two of them.
MSI TDR: Can you share with us some information about the investment calendar? For example, when will your first product roll off the production line?
Alican ÖKÇÜN: Our investment will be concluded over four phases, and a factory will be built on an area of 400,000 square metres. Within the first phase, we will make an investment of $18 million this year. This will be followed by an investment of $50 million in 2021 and an investment of $75 million in 2022. Construction will be completed over two years, and after that we will quickly roll out the first product from the serial production line. By the end of the fourth year, we aim to have reached a production capacity of 1 million units per year. It will take six years for us to reach full capacity, and once we achieve that, we will start producing 100 million sensors per year.
6 Billion Turkish Lira Investment Targeted
MSI TDR: Are there any other projects on the horizon for the period after the completion of this investment?
Alican ÖKÇÜN: We will continue to invest in the field of semiconductor sensors. In fact, we aim to make a total investment of 6 billion Turkish Lira over a period of approximately 15 years.
MSI TDR: Returning to the subject of products, can you give us any information about the sensors you will be producing initially?
Alican ÖKÇÜN: As I mentioned, we have already designed almost 400 sensors for use in many different sectors. These all are the most widely used sensor types around the world. We will launch serial production with this product range of 400 items, including infrared sensors, but also single-, double- and four-crystal sensors.
MSI TDR: If you were to take a picture of the current semiconductor sensor market, what would you see in that picture?
Alican ÖKÇÜN: While the global market for semiconductor sensors is valued at $600 billion, the outputs of this sector are being used by many different sectors, with a total market size of $30 trillion. To give you a simple example, some of these sensors are produced for use in digital cameras, which are used in a wide range of devices including mobile phones and personal computers. As technology advances, and as Industry 4.0, as well as products like smart cars and home robots enter our lives, the use of these sensors will increase. It is said that the proportion of electronic components in an average car, which was 2 percent in 1990s, will reach around 48 percent by 2025, and sensors will constitute a significant part of such components.
MSI TDR: To give our readers a better idea, can you share with us some examples of the number of sensors used in various products?
Alican ÖKÇÜN: Dozens of sensors are used even in the simplest of white goods, allowing the detection of a wide range of factors, including smell and temperature. There will be at least 120–130 sensors in smart cars. It is also worth noting that the sensors in a CBRN system are not much different to the odour sensors found in refrigerators. Let’s also give an example from our sector: In an ARES Explosion Suppression and Fire Extinguishing System used in a 4×4 tactical wheeled armoured vehicle, there are nearly 15 such semiconductor sensors.
On behalf of our readers, we would like to thank Alican Ökçün, Chairman of the Board of Nero Industries, for taking the time to answer our questions and for providing us with such valuable information.