Interview with Thomas Brunner, CEO, Kathrein Solutions

Interview

A Review of 2022 and an Outlook for 2023

In an interview with RFID & Wireless IoT Global , Thomas Brunner talks about what 2022 was like for Kathrein Solutions, how German companies need to 'rethink' in order to build resilience in challenging times, what new products will be available in 2023, and what new unique selling propositions Kathrein Solutions will soon have.

Thomas Brunner is Managing Director at Kathrein Solutions GmbH. He has worked in various divisions of the Kathrein Group since 1999 and is a sought-after expert for RFID, AutoID and IoT Solutions.

Kathrein Solutions GmbH and its integration partners offer turnkey AutoID solutions including hardware, software, services and support.

1. How was the year 2022 for you?

Brunner: The first quarter of the year was really good. After two pandemic years, a sense of normality had returned. The investment climate in the automotive industry was still restrained at the beginning of the year and many supply processes were under review, but I had the assumption that this would change in the course of 2022. Due to the war in Ukraine, this hope was not fulfilled.

2. What are the concrete effects of the war on German companies?

Firstly, the war has led to uncertainty among the executive levels of companies and therefore, in turn, to a decline in investment. Second, the energy crisis is causing delays in the implementation of projects. In many countries, governments' budgets have dwindled as they are forced to buy "expensive" energy.

Tolling systems in Asia and South America, for example, are only being expanded at a slow pace. In Egypt, for example, there is currently more investment in grain and other goods that are essential for survival. Nevertheless, there is still a considerable need for digitization. As soon as energy costs normalize, I believe the economy will also begin to pick up again.

3. How have the challenging events of 2022 affected Kathrein Solutions?

Not as much as in 2021. As an electronics manufacturer, Kathrein Solutions is not extremely dependent on oil and gas. We are primarily dependent on electronic components such as semiconductors and printed circuit boards, and the situation has improved in this market. Waiting times for semiconductors have dropped from a 40- week wait to 15 weeks, and the trend is downward. The semiconductor shortage has generally affected us less in 2022. Kathrein Solutions has a very efficient purchasing department that pays attention to stocking.

We have therefore always been able to deliver well in the last three years. At times, delivery times have increased from three weeks to six weeks. But production of all parts at the Chemnitz plant has continued.

4. You mentioned in an interview that there is almost no capacity left in Europe for semiconductor and printed circuit board production. How does this affect you in concrete terms?

The status quo after about 20 years of development is that more than two thirds of all semiconductors will be produced in Asia. The largest chip factories are located there, followed by the USA. Although the USA, Europe and Japan are technological leaders in the development and manufacturing of semiconductor components, for cost reasons, the production plants are primarily located in Asia, with potentially fatal consequences for our supply chains if the conflict between China and Taiwan, which is supported by the West, intensifies.

For electronic circuit boards, the situation is even more dire. Nearly all global manufacturing capacities are based in China and Asia. In Europe and the USA, there are only capacities for defense and medical technology. Due to the ongoing trade war between the USA and China, Taiwan and Korea are no longer a secure source of supply. In Europe and the USA, there is simply too little manufacturing capacity for semiconductors and printed circuit boards.

5. What kind of shift in thinking do you think is necessary for electronics manufacturers?

You have to realize that unrestricted global trade also brings risks. It is therefore advisable to store components and build up safety stocks. Relocating production is also a good idea. To the EU, for example, but this can only be implemented at a slow pace. Unfortunately, semiconductor capacities cannot be built up so quickly either.

However, a shift in thinking in all these directions is taking place, and that's good. Fortunately, companies have become more flexible in their changeover. In the future, we will have to avoid dependencies like those in the energy industry and classically have at least two suppliers for the most important components in production. This used to be common, but then the industry moved to the single-source model. This made sense as long as components of a certain design were only available from one manufacturer. This was the case with microcontrollers, for example. There used to be very few manufacturers and types, but the market has diversified considerably. Comparable microcontrollers are now available from several manufacturers in the same quality.

6. What specific changes has Kathrein Solutions undertaken?

Kathrein Solutions has organized the entire production at its plant near Chemnitz in Saxony. In addition, we always try to retain two suppliers for systemically important components.

7. What transformation is necessary for companies in order to become more resilient in the future?

We can clearly see that our infrastructure is not sufficiently protected against threats and damage from inside and outside Germany. Infrastructure protection must be given a higher priority in the future. The Deutsche Bahn has already implemented this: it has a Critical Infrastructure Officer who has absolute veto power on the Board of Management. The Federal Ministry of Interior has set up the Joint Critical Infrastructure Coordination Staff (GEKKIS).

The protection of public spaces with surveillance cameras, for example, will become more important. Self-sufficiency in energy supply is also important. In Germany, we have already come a long way in this respect because of the high proportion of renewable energies. However, we need more solutions for distributing the energy that is generated in the north by wind power and in the south by PV systems – energy that may be needed in the other parts of the country.

New TRENDS and PRODUCTS in the RFID Sector

1. What trends do you see in IoT and RFID applications?

Brunner: The big trends concern UWB. Since 2019, iPhones and Samsung smartphones have been equipped with a UWB chip. Since then, UWB chips have become much cheaper. Applications with UWB already exist now for smart homes and smart cars, and this will only increase. We see a very large field of application for UWB in the area of industry and logistics, but autonomous or semi-autonomous vehicles also benefit from modern UWB technology. Kathrein has been active in this field since 2019.

2. What new products will Kathrein Solutions bring to the market in 2023?

In the first quarter of 2023, we will present a reader that can be used worldwide for the first time. This is an absolute innovation. It can be used in Europe and many other countries on both the low and the high frequency bands; there is no longer any hardware variant. The device is simply switched to the different bands by software. In the past, a separate hardware variant was necessary for the respective bands. This is now a thing of the past. The RRU1400 and ARU2401 have this feature.

Our RFID systems are also becoming more secure. Kathrein Solutions was one of the first RFID solution providers to always integrate a powerful industrial computer with a Linux operating system into the RFID system, not only to read transponders, but also to evaluate the raw data decentrally on the reader.

The reader can therefore be connected directly to the network socket; an additional computer is not necessary. However, if a reader is then connected to a network of a large company, it must meet the same security standards as a Windows or Apple computer. All the standards that exist for up-to-date and secure network communication are available here, and our readers can be integrated directly without any additional effort. What is new is that we are increasingly using so-called high-security transponders for security- relevant applications, which are addressed via highly encrypted air interface communication.

3. To what extent are these transponders more secure than previous models?

In the past, the authentication key was stored directly on the reader itself. The key could be found there and the entire system could be compromised. In the new RRU 7700 reader, we have integrated a secure storage area called HSM High Secure Memory, which can be described as a memory vault. Keys can be stored in this memory area in a highly secure and decentralized manner.

Furthermore, it is important to find a way to transfer the key from a backend system to the reader. This is done via the network and an encrypted and secure connection. In many applications, the keys also have to be provided in real time and very quickly, since we are dealing with moving objects.

We have now optimized the entire software and hardware architecture at our company for this purpose. Our RFID systems can process different keys with a high level of security and at speeds of over 200 km/h. They store everything securely and the communication to the transponder is also highly secure. The new device is about to undergo a major roll-out in a toll infrastructure in the Middle East.

Overall, security requirements have increased for devices used in critical infrastructure. Roads and tracks need to be better protected. We are very well positioned in this respect, because we have always had to deal with connections to payment and government systems in toll systems, and the security requirements are naturally high.

4. Does Kathrein Solutions take sustainability into account in new products?

Yes, of course. In 18 months, the fourth generation of the reader platform with massively reduced energy consumption will be launched on the market. This will have a major effect on energy costs for our customers, and energy must be used sparingly. This has always been important to Kathrein Solutions. That's why there are large PV systems on the roofs at all locations.

A large part of the company car fleet is electrified and all employees can charge their cars on the company premises, so that even employees who do not have access to a charging station at home can switch to an e-car. An important role model in e-mobility is certainly the board of management, who were the first to switch to e-cars.

New Solutions

1. Systems with low energy consumption are often used for smart city applications. Is this an area for which Kathrein Solutions offers solutions?

Brunner: For us, smart city applications have always belonged to the area of Intelligent Transportation Systems (ITS), because here there are very frequent interactions with other functions. We have had projects where a transponder was used for tolls, vehicle registration and parking. In Africa, we have a toll project where the transponder is also used for payment at the gas station.

Just to explain: for cars, the transponder is on the windshield; for trucks, there is at least one additional transponder on the tank due to the length of the vehicle. We are very well positioned here. The control of traffic flows and traffic lights are also part of our area of expertise.

2. Kathrein Solutions offers many solutions for the rail industry. Are there new developments in this sector?

Yes, absolutely. We are currently equipping wagons with dual frequency transponders from one of our partners. They are attached to the train carriages and wagons at existing screw points and look like a stainless steel hang tag. The advantage is that they are both UHF and NFC capable. This means staff can use a service mobile phone to read the ID of the transponders.

3. Will there be innovations in the area of e-charging?

Yes. We have developed an identification solution for an inductive high-performance charging station for buses in public transport. It charges the battery of a bus within two minutes. The disadvantage is that it takes 20 seconds to boot up. To avoid waiting times, the bus is identified with RFID a few hundred meters before the charging station.

The charging station powers up and is already in standby when the bus arrives at the stop. Inductive charging takes place during boarding and deboarding. Charging also works with overhead cable taps, of course. In another project, overhead taps are used to charge the buses at night at the depot.

4. You spoke earlier about UWB as a strong trend in the RFID world; will Kathrein Solutions offer a UWB solution in 2023?

We have been offering an RTLS solution with UWB for a long time, but have always come up against certain limits. This is because UWB must not be used outdoors with stationary transmitters to avoid interference with other radio applications. Outdoor UWB transmitters must be mobile. This meant that our partners could not use their RTLS systems outdoors. However, we have now found the solution for this. We now use the AoA Angle of Arrival as the basis for location determination for outdoor use.

Normally with UWB, the signal propagation time between the UWB transponder and at least three receivers, called anchors, is measured, and this also happens in the warehouse. We have now programmed the anchors to be flexible. In the outdoor area, they only listen. The transponders, on the industrial trucks for example, in turn become mobile transmitters outside. The location can be precisely determined from the angle of incidence of the signal when it is measured several times. This way, UWB can be used outdoors after all.

Our system automatically detects in which anchor area the transponder is located and then automatically and seamlessly switches back to measuring the signal propagation time TDoA Time Difference of Arrival in the indoor area. This measurement method is somewhat more robust than measuring the angle of arrival and is accurate to within 30 cm. With this solution, we take RTLS to another level.

5. Are there already similar UWB solutions from other suppliers?

UWB RTLS for dynamic use in combination with UHF RFID indoors and outdoors is only available from Kathrein Solutions.

It is a unique selling point, so to speak. We are also very proud that our systems are so dynamic and adaptable. We adapt them to the environment and regulations that apply at our customers' sites so that they can take full advantage of our solutions.