Sir Peter Bonfield Speech, ZGC Forum, Beijing, Shangri la Hotel, 09:20hrs, Friday 2nd November 2018

"The next 50 years: Fostering innovation through global collaboration"

Good morning everyone. It is an honour for me to talk to you today at this ZGC Forum.

We stand at an important moment in history. This year, China marks 40 years of reform and opening.

The world faces great uncertainty with increasing trade tensions, rising protectionism, and conflicts. Mankind faces historical challenges that technology, innovation and global collaboration could help overcome.

I believe China is reaching out to the world in a constructive way. China's Premier Li recently visited Holland. The CEO of my company, NXP, was fortunate to be one of the business leaders that met the Premier. I understand discussions were very good, and touched on the importance of encouraging and protecting innovation.

I have been Chairman of NXP Semiconductors, a Dutch company, since 2006 when it was spun out of Phillips. Fostering innovation is vital to NXP. We spend more than 15% of our revenue on R&D.

My background is as an Engineer from the UK. I have been in the technology business for more than half a century – 52 years.

I joined Texas Instruments straight out of university and was quickly sent to Dallas, Texas, in 1966. A big culture change for me! To give you an idea about the semiconductor industry then, one of the big issues of the day was the transition from 2" to 3" wafers.

So, I have seen a lot of change!

Today, I would like to share my thoughts on where innovation could go in the next 50 years, in what I believe could be a golden era for collaboration between China, the UK, Holland and other countries.

The thing that has interested me most over my career is how and why industry leaders often miss the next technology shift and, as we all know, tend to overestimate in the short term and underestimate the long term.

Some examples –

In 1996, as CEO of British Telecom, I was hosting an ITU Conference and asked to open a time capsule from the ITU Conference of 1970. They had asked the leading Telco engineers from around the world to predict what the industry would look like 25 years in the future. They did a good job on the extrapolation on speed and bandwidth, but totally missed the Internet and mobile phones.

I was part of a European Union project in 2002 on the information society or the networked based society, as it was referred to. There was lots of discussion on governance of privacy, freedom of speech, and regulation. But nobody had a vision of the impact that social media would have as we know it today. Certainly, in most cases, including this one, regulators tend to look back, and then react to catch up.

Can enlightened regulation help innovation? This could be a question relevant to self-driving cars, perhaps.

It is often asked why IBM did not invent the PC, but why did it take DARPA, the US Department of Defence agency responsible for early stage tech development, to get the computer industry to introduce IP protocol? DARPA did not set out to invent the Internet as we know it, but they did enable it.

Likewise, why did a then obscure British researcher, Sir Tim Burners-Lee, at CERN, invent the World Wide Web, and not Microsoft?

12-years-or-so ago, Nokia had 42% worldwide market share of mobile phones. Dominant market position and, you would think, dominant market insight. But it was Apple that invented the mobile smart phone.

Why did Wall Mart not set up an Amazon?

It is all about innovation, and how to cultivate and encourage it.

It is about creating a culture that embraces innovation, accepts risks of failure, and understands that good extrapolation based on what we know today, is not the same as good innovation for tomorrow.

Innovation is also about being brave. You sometimes have to risk what looks like a good stable business today, to disrupt for the future: a tough discussion at many boards; the classic innovators dilemma.

The trade tensions we see today may not only impact international trade, but also global innovation. Protectionism in the name of innovation makes no sense – it is cooperation, on a global scale, that is the source of, and that will help drive innovation forward.

Multinational companies play an important role in driving and supporting innovation. Even if the innovators themselves come from unexpected places!

China plays a fundamental role in the value chain of many such companies – not just as a market, or a centre for production, but as a global partner.

How can multinational companies such as NXP from Holland, or other countries, work with China in high tech innovation?

How can ZGC play a positive role in this process?

The UK, Holland and China are potentially great partners in many fields. Innovation is one. The UK is ranked second in China's investments into Europe; the UK's investments into China have grown rapidly in recent years – apparently growing by 82% year on year in the first half of 2018.

China has established itself as a centre for global innovation. Many multinational companies have brought their R&D centres to China. This gives them access to high quality Chinese talent, and brings them close to their major market of the future – China's growing consumer market.

At NXP we focus on delivering a vision of Secure Connections for a Smarter World.

With over 60 years of combined experience and expertise, the company operates in 32 countries, employs more than 30,000 people globally, and is the leading automotive electronics and artificial intelligence – Internet of Things semiconductor company in the world.

NXP has bridged innovations between Europe and China for 30 years.

NXP is committed to China: committed to bringing leading technologies, revenue and capital to China.

We have more than 7,000 employees in the Greater China region, and are seeing tremendous growth here.

Today, NXP has 14 offices and 6 R&D design centres across China, with one main production facility.

One reason behind NXP's great success in China is the establishment of joint venture partnerships.

In 2002, NXP formed a joint venture with a multinational corporation on integrated circuit design, which was the first of its kind in China.

Our joint venture with Chang An Auto was the first Chinese company to achieve long-distance self-driving for the Chinese connected car industry.

Other NXP joint ventures include China's first automotive semiconductor company in partnership with a local telecoms company.

NXP collaborates with industry leaders in China to develop secure state-of-the-art products designed to protect end-users.

We just heard fascinating comments from Mr. Lei ["lay"], CEO of Xiaomi ["she – ao – me"] on this stage.

NXP partners closely with Xiaomi.

Some of you may be familiar with the subway cards for the Beijing subway, and you know that there is now a mobile app that you can use to pay for your ride. Supported by our CEO, Rick Clemmer, NXP and Xiaomi ["she – ao – me"] worked together to develop secure tap-to-pay for the mobile app here in China as well as other places around Asia.

NXP believes in developing for the future autonomous world, which is why we are the current leading automotive chip manufacturer.

In China, a place where people eagerly accept new technologies, connected cars are expected to take off very quickly, and NXP has committed itself to producing solutions for the Chinese market.

NXP worked with Alibaba's AliOS (Ali – oh – ess) on new in-vehicle experiences such as a multi-screen display, and AI-driven interaction. We will install this jointly-developed system in millions of vehicles in China in the next few years.

NXP and Baidu teamed up on the Apollo Open Autonomous Driving Platform. This will use NXP's AI chips for vision processing, car-to-car and car-to-infrastructure communications, and security, amongst other things.

To wrap-up, NXP has a wealth of experience globally and has spent 30 years dedicating itself to, and serving, the rapidly changing Chinese market.

This makes me excited to see what the future of innovations has in store.

In the new global context, what should we prioritise now to encourage innovation in the future? What are our big issues today?

What will the technology world look like in 25 or 50 years? That is the question, and of course nobody knows, and that is the fun part!

I believe there is immense opportunity for the UK, Holland, and other nations and China, their companies, scientists, engineers, and innovators, to cooperate in answering and preparing for some of these questions.

First, artificial Intelligence in everything; internet of things IOT, big data, perfect speech recognition, Quantum computing, new materials, new architectures, block chains etc. The list is long. The UK is a leading innovator in AI and Big Data. China has some of the biggest data sets in the world, and impressive data-driven companies too. There is lots of room for partnership.

With 10-40 billion or even a trillion or more connected things, another important issue will be Cyber security. Bilateral and global cooperation on this issue will be crucial.

Other big issues will be environmental, and perhaps increased technology regulation, maybe?

But innovation will be the key. So how do we foster innovation?

Setting up a Chief Innovation Director does not work!! I share four ideas with colleagues and friends here today.

First, it must be cultural and style. Innovation is encouraged by mixing people from different backgrounds and with different skills; people from different countries, such as the UK, Holland and China, working together. Look at the number of people in Silicon Valley not originally from the US. Look at the number of Nobel Awards to people working in different universities or countries coming together to achieve remarkable breakthroughs.

Second, innovation is helped by tone from the top. Do innovators get rewarded, promoted, and applauded or regarded as geeks? Innovation is also encouraged in clusters of like-minded groups of people, either clustered physically close – such as here in ZGC – or networked close. Putting 2 and 2 together to make far more than 4. Think mobile phones + Internet and the explosion that produced.

Third, we must promote global cross-sector cooperation. Think Artificial Intelligence coupled with robots, cars; everything think China, the UK, and other nations working together in partnership. Another big leap forward; an even bigger explosion maybe. Anything is possible.

Finally, we must protect innovation while ensuring all can enjoy its benefits. Technology and science should be able to operate transnational for the good of everyone. We will need to ensure that the basics work well such as protection of intellectual property and abiding by local law, regulations and customs. But generally science and technology should be considered forces for good, and not to be feared.

These are my personal views after half a century in the business. I am sure the next 50 years will be just as exciting! As the Chinese would say, we should "use the past as a mirror" in order to prepare for the future.

This year ZGC looks back on 30 years of innovation. Many of your companies have grown into global brands.  ZGC has impressed me as a global centre for innovation.

Looking forward, I have one recommendation for ZGC to consider.

Partnership on a global level will be a driver of innovation in the future. Innovators will probably come from unexpected places, but one thing is certain – cultivating young and ambitious entrepreneurs in centres like ZGC will be critical.

With this in mind, I recommend that ZGC could consider forming a Global Innovation Advisory Board – attracting international leaders from business, science and technology, to work with their counterparts in ZGC. This advisory board would take a global view of cultivating new talent in ZGC, China and around the world.

This Advisory Board, through collaboration and partnership, can support joint innovation, better market access in China and globally, deeper cooperation, joint research and R&D, IP protection, incubating new technologies, and cultivating innovative leaders of tomorrow.

I hope that through initiatives such as this ZGC can continue to grow and flourish both in China and internationally.

I for one will be flying the Chinese flag showing my support for global partnerships in innovation. [This is an example of me doing just that at my home in south west London on China's National Day this year!].

So thank you for listening, and to all those innovators out there – Good Luck!

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