Olaf Kratge, Head of Regional Market Management APAC of Hilscher Gesellschaft, a globally recognized leader in industrial communication solutions, gave a keynote speech at D-Forum on March 13 in Taipei. DIGITIMES had an exclusive interview with Mr. Kratge on the company's extraordinary technology and strategies that prepare its customers for easy implementation of automation as well as endurable and reliable solutions.
Hilscher has established a strong presence in Asia through subsidiaries in China, South Korea, and Japan. In Taiwan, Alpha Pacific is a key partner, and the collaboration began about one and a half years ago. Beyond these key markets, Hilscher also has a partner in Singapore.
"Our primary objective is to drive substantial business growth across these regions," said Kratge. "While progress has been gradual due to the nature of the industry, we are committed to expanding our reach."
Kratge said that the company is actively exploring opportunities in Vietnam and Malaysia, where significant potential for growth exists. Asian footprint is complemented by its operations in India, which present a unique set of challenges and opportunities due to different market needs and pricing dynamics.
Pioneer of industrial communication technologies
Hilscher has been a pioneer in industrial communication for nearly 40 years, with its 40th anniversary approaching next year. As one of the first companies to introduce PROFIBUS, Hilscher has also consistently led advancements in real-time Ethernet communication. Over time, the company has evolved alongside industrial communication trends, from legacy fieldbus systems to real-time Ethernet, gigabit speeds, and the integration of OT (Operational Technology) with IT (Information Technology). This shift focuses on collecting field-level data and making it accessible for cloud-based processing and value creation.
Recognizing early challenges like diverse protocols and differing OT/IT requirements, Hilscher developed innovative solutions to bridge these gaps. Its multi-protocol systems enable seamless transitions between legacy fieldbus and modern Ethernet technologies without disrupting existing networks. This approach allows customers to upgrade easily while maintaining compatibility.
Supply chain resilience with chips built by TSMC
Global supply chains are relocating due to their customers' demands under geopolitical pressure. Hilscher also has adopted sound strategies to maintain resilience and flexibility.
Hilscher's core concept is a unified hardware and software solution, exemplified by the netX family of multi-protocol SoCs. Designed entirely in-house at Hilscher's Berlin center, these SoCs integrate seamlessly with every common protocol standard, ensuring tight hardware-software integration. Production is handled by partners Renesas (earlier generations) and TSMC (current models), with TSMC offering flexibility through diversified manufacturing sites to mitigate geopolitical risks.
Hilscher avoids reliance on single-source suppliers for components like DC converters, qualifying multiple sources to ensure production continuity. A robust stocking system based on long-term forecasts guarantees product availability, supporting both customers who integrate netX chips and Hilscher's own ready-to-use products, such as PC cards or gateways.
Lessons from past supply chain disruptions have driven Hilscher to adopt localized sourcing strategies in Europe, ensuring stability. This commitment to innovation, integration, and resilience enables Hilscher to deliver reliable industrial communication solutions tailored to evolving global challenges.
Hilscher does not have fixed agreements with TSMC dictating production locations, instead opting for a flexible manufacturing process that isn't confined to a single factory. This approach addresses the company's approach to global risk distribution, mitigating the consequences of events like natural calamities or local shortages of components, which could lead to production losses.
Hilscher combines robust hardware with proprietary, in-house-developed protocol software stacks and unified tooling. Unlike others who outsource software development, the company, headquartered near Frankfurt in Germany, maintains full control, ensuring seamless hardware-software integration and safeguarding intellectual property. Its business model focuses on delivering integrated solutions rather than standalone components.
To ensure production stability, Hilscher qualifies multiple sources for critical components and maintains a long-term stocking system based on forecasts. This strategy supports customers who integrate its chips and ensures the availability of netX-based products. Lessons from past supply chain disruptions have led Hilscher to adopt localized sourcing strategies in Europe, where possible, providing a stable sourcing environment, said Kratge.
Hilscher's adaptivity to market demands
The advantage of Hilscher lies in its ability to adapt to the industrial market's unique demands, where technologies must remain viable for decades, sometimes 10, 20, or even more years. This long-term perspective has shaped its approach to evolving market trends.
Industrial communication started with fieldbus technology in the late 1980s, when customers transitioned from discrete cabling to fieldbus systems. By the 2000s, real-time Ethernet emerged as a hot topic, promising better performance and simplified operations. Hilscher's strategy recognized that legacy fieldbus systems couldn't simply be abandoned. Millions of nodes were already deployed in the field, supported by a large workforce trained to install and maintain them. These systems wouldn't disappear overnight, so Hilscher developed a multi-protocol solution capable of running both legacy fieldbus and real-time Ethernet technologies.
This approach benefits customers by allowing them to transition seamlessly from fieldbus to real-time Ethernet without a profound redesign of hardware or application interfaces. Also, the same drivers remain compatible, enabling easy upgrades as market demands evolve.
A similar scenario unfolded around 2018-2019 with the introduction of TSN (Time-Sensitive Networking), which promised to solve performance challenges. While TSN technology exists today, it has yet to achieve widespread adoption due to the lack of critical mass. Industrial players like Siemens or Mitsubishi have remained committed to their existing ecosystems, delaying TSN's market penetration. Customers are cautious about being early adopters of new technologies and often wait for broader industry acceptance before making significant investments.
Currently, the market trend is focused on gigabit communication. While many customers express interest in gigabit capabilities for future readiness, they often admit they don't need it immediately, especially when existing real-time Ethernet protocols at 100 megabits are sufficient for their needs. Mechanical limitations in systems often outweigh communication speed as a bottleneck.
Kratge emphasized that Hilscher's strength lies in preparing customers for these transitions. "Our technology supports all three stages of protocol evolution: legacy fieldbus, real-time Ethernet, and emerging gigabit solutions. Additionally, we are exploring single-pair Ethernet for long-range, lower-speed applications (10BASE-T1L), ensuring compatibility across diverse use cases."
Hilscher's netX 900 family for gigabit controller applications represents the next generation of its core technology. Besides the company's well-known multiprotocol approach, the ARM-based netX 900 incorporates a crypto engine and crypto cores. It features real-time encryption at the field level, certificate and key handling, and fully secured internal communication.
Security features as competitive advantage
Another critical trend is security. As regulations increasingly mandate secure protocols, secure boot processes, root-of-trust mechanisms, and certificate handling, Hilscher is proactively integrating these features into its solutions. "Security is becoming a non-negotiable requirement for industrial communication systems, and we are confident that our advancements place us ahead of the competition in this area," said Kratge.
He explained that security is always a combination of hardware and software. While secure software is essential, it cannot function effectively without robust hardware support. The best-in-class solutions integrate both hardware and software to ensure comprehensive protection.
To further enhance security, Hilscher is preparing for certification under the latest standards set by TÜV in Germany. This certification process ensures that secure products are developed within a secure environment, including secure debugging tools. After all, it is counterproductive to have secure communication while leaving backdoors open through unsecured debugging tools. These advancements will be part of its upcoming product release, which combines hardware and software security seamlessly.
Kratge said Hilscher's current netX 90 communication controller already include basic security features such as a crypto core, key handling, and secure boot capabilities. These meet the requirements of the European Cyber Resilience Act and are designed for high-volume markets, particularly for device applications. "The next step will be implementing these advanced security features in our controller technology products."
Hilscher's approach ensures that solutions are not only prepared for today's industrial security challenges but also for future regulations and customer needs. Security is no longer optional—it is a critical requirement for industrial communication systems. "With features like secure boot processes, root-of-trust mechanisms, and certificate handling, we are confident that our technology is more than one step ahead of the competition," said Kratge.
Hilscher's strategy ensures customers can rely on its technology for decades while staying prepared for future innovations. By supporting easy implementation for customers to overcome challenges in crossing legacy systems to embracing emerging trends like gigabit and security protocols, Hilscher enables seamless transitions and long-term reliability for industrial applications.
Article edited by Jack Wu
