Hugo Scott-Gall: Welcome to Suite Talk, an Active Share series that taps into the minds of top business leaders. I’m your host Hugo Scott-Gall. Today I am pleased to welcome Alex Hsieh to Suite Talk. Alex is a founder, president, and general manager of Voltronic, a leading Taiwan based company that specializes in the design and manufacturing of uninterruptable power supplies, UPS, and inverters. Since the company’s founding in 2008 by Alex he has led the company with a focus on innovation, vertical integration, and long-term value creation. Alex, thank you for joining me and welcome to the show.

Alex Hsieh: Thank you so much.

Hugo Scott-Gall: Lots of questions for you, but let’s start with a quick overview of Voltronic. What’s the company’s mission? What does the company do? And then let’s talk about why you decided to found it.

Alex Hsieh: Voltronic’s major business is uninterruptable power supply, that’s 70% of our revenue. And we have another 25% coming from solar inverter and another four percent/five percent coming from EV charger. We have about 5,000 staff located in China, Vietnam, and in Taiwan, including 500 R&D engineers. We have a very unique business model. We don’t do own-brand. We do design and manufacturing only for all the Tier 1, Tier 2 branding companies globally. So, we supply to all the famous Tier 1 brand companies like Schneider, Vertiv, Eaton, ABB, Riello. On top of that we have maybe plus 300 to 400 we call local keying customers in each region and country in the world.

One of the very unique things is our no own-brand business model. I believe until today many of our Tier 1 customers, especially, they have a large portion of their revenue are still in-house manufacturing by themselves. I also observe that many of the Tier 1 customers are already shifting from product supplier to energy management company. So, to doing that, I believe that for the product itself, especially for small to medium size, they will gradually outsource it. So, this is the revenue we are looking for. To do that, I think the most important thing is we have to let the customer trust our business model, that we don’t compete with them. We are the partnership of design and manufacturing. This is the rule number one always for everyone in Voltronic.

Hugo Scott-Gall: You founded the company in 2008. Did you feel like you were taking a big risk? Did you have a high level of confidence that there was a problem that needed to be solved? Was this something you were interested in? Did you have many sleepless nights thinking, you’ve worked at Apple before, you’ve had a successful career. Why take the risk? Or were you so convinced the world has a problem and I can see a way of solving it?

Alex Hsieh: Indeed. Allow me to go back to my first company which is not Voltronic. I founded my first company in 1988. So, that’s 37 years ago, it’s a company called Centrillion. It’s a UPS company, but since day one I do 100% ODM. At that time, UPS was a very small market sector. That was so small, I give an example, if we are manufacturing and selling 400 units of offline UPS in a month, we are extremely happy. So, the revenue was so good. By now we are manufacturing maybe 400,000 units a month. I was not so happy. So, you can see the market also continues to grow.

In year 2001 I actually sold my first company to a Taiwanese company called Phoenixtec. Phoenixtec at that time was already the largest UPS ODM manufacturer in the world. They serve all the big brands, and they are also listed company. The reason why I decided to sell my first company to Phoenixtec is UPS industry is a very isolated industry, regarding human resources. So, for many years, I had a shortage of good people and the infrastructure. So, by talking to Phoenixtec I understood they have very good resources on everything, facility, people, and they are a very decent and honest transparent company.

So, then I sold company, actually after I sold, I continued to lead my original company but under their group. From 2001 to 2007, I continued to lead the company, again, 100% ODM. The revenue will grow from very small, $600 ND in 2001 to $7.2 billion NT in 2007. So, we grew revenue by 10 times within seven years. Again, 100% ODM. So, this gives me influence number one is for UPS industry of ODM, as long as we are very focused, there is no shortcut, no quick money, and viewed high mix, low volume product portfolio in very long tail way and we can achieve something. So, I was really happy I make the decision of join Phoenixtec.

But at end of 2007, the chairman of Phoenixtec wanted to retire, and he did not have a second generation interested to take over his business. So, at the end, he decided to sell the company to Eaton, one of his big customers. Eaton certainly is a very powerful, very good company. But they are branding company. Even though Eaton after this acquisition was telling me that—Because Phoenixtec at that time already had about $700 million for ODM. So, they also want to build up the ODM. In my own thinking is, no matter how big we are, for ODM and branding we are not possible to do both well. We have to choose. So, then I turned down the proposal. I took six staff with me in early of 2008 and I founded Voltronic. I started everything from zero again.

Hugo Scott-Gall: So, starting from ground zero again when you don’t have to, when you already have a successful career, do you just think about the opportunity, or do you weigh out the risks? Are you a worrier or are you a dreamer?

Alex Hsieh: Well, my thinking is very straightforward. I alway think about what kind of value I can create in the remaining part of my professional life. Even though I was not the owner anymore from 2001 to 2007 when I was working in Phoenixtec, but it was very enjoyable. There are many things I can create regarding with the UPS ODM. But once this situation closed down, I have no second sword. I understand to create the company again at the age of 48 was not so easy. But I start to decide to create that. Follow that by, certainly there are a lot of challenges.

You remember that 2008 is the year of international financial crisis. So, we start to build our factory in Shenzhen in early 2008. In October that year, the factory was ready. We are open for orders. I have 200 staff hired. With the capacity we are ready to make about 200,000 units of UPS every month. But October is the worst month of the financial crisis year. So, all the customers, all the orders disappeared. That month we only ship 2,000 units. So, my capacity utilization rate is one percent. So, October, November, December we have a very tough situation. We are continuing to lose about 10% of my capital every month.

I remember my wife told me in the end of 2008, she said, “Alex, if this continues by March 2009, we are running out of our capital.” But I think things come always on two sides, good side and bad side. Even though they are very challenging, but because of that, all the staff are working very hard. I remember in the end of 2008, because of very critical impact for global industry, many companies are laying off people or cutting off their salary, etc. I am the very new company. I don’t have any of the resources, but I didn’t do any of this. I still kept the salary. I even gave a bonus in that year, even though not much, to our staff. I believe this is also one of the keys to building up the company culture, especially when they are in a challenging period of time.

So, by March 2009 we didn’t use up all our cash. In that month we broke even. And then we started to make profit. But still, I remember even 2009, first half, we are gradually away from the most critical time. All our team members are still trying their very best for cost savings. We didn’t ask for that. In Shenzhen, in summertime, we’re very hot. Our staff didn’t switch on the air conditioner for that entire summer. So, even today, even though we have pretty good scale, at 7 p.m. every day our staff switches off the air conditioner every day.

So, I think this is a company culture I really cherish. That’s also telling me that influence number two as a leader is not only about the strategy, it’s more about the resilience that stays with your team and holding all the detail and working very hard.

Hugo Scott-Gall: That’s a very tough time to start, October of 2008. But it’s very interesting what you say about resilience. I suppose that does, it has to come from you as the leader. So, how do you think about for a new company creating a culture? Did you just reflect on what you wanted to achieve on your own values and let that be the template? Or did you actually write down what I want the culture of this company to be?

Alex Hsieh: I make Voltronic a very flat organization, even though we have 5,000 people today. But we have very little tiers in the management team. So, when we say management team, it’s about 30 people, that’s a function head for each function unit. In R&D, we have 12 R&D teams, we have 15 R&D engineers, we have three factory managers, one manufacturing director, one quality director, and one sales VP, that’s all. The way I pass through my culture, my value is through abrasion. My personality is I’m a very hands-on person, even though I’m already the chairman.

The founder of the TSMC, Morris Chang, is an extremely successful gentleman, he used to say a good CEO is spending 80% of his time with strategy, 20% in operation. I’m totally opposite. I may spend 95% in operation because in the UPS industry, is a very typical high mix/low volume industry. There are a lot of details. So, the only way you can achieve success is to embrace all the details and execute them to the best efficiency.

In Voltronic, no matter which tier of the management, they have to be very hands-on. To achieve that, I have two review meetings every day, every week with all the engineering team, quality team, manufacturing team, through all the projects, through all the operation, we are reviewing all of the detail. I believe this is one of the very unique things of the company—our staff can see what I’m doing, they also need to do the same thing. And step-by-step, it becomes a culture.

Remember that in 2020 to 2022 there is a very severe global supply chain disruption. In electronics and the power industry, we use a lot of semiconductors for computing, for power components. All the semiconductors at that time were from Tier 1 suppliers like ST Micro, Onsemi, Infineon, etc. everyone has very serious shortages. I believe everyone across the industry, the allocation they can get may be 20 to 30% compared to the normal level. So, that’s a very big gap of shortage for everyone. To mitigate that, we have no other smart way. I’m leading all the management team every day, for hour in the morning, for hour in the afternoon, we review all the shortage components.

The number of the shortages, without putting the Excel file, you’re never able to see the finish line, there are several thousand of that. But we review one by one. And the way we review is to find the alternative. We not only need to find one, we need to find maybe six or seven because one, two, three, they are fully utilized very soon by the market already. So, again, this is the resilience. This is the company culture I am passing through. I believe right now every tier of the management team, has been working with me 20, 30 years. Many of them, after they graduate, we are working together. So, this is one of the very unique values we have in the company.

Hugo Scott-Gall: It sounds like you work incredibly hard. Do you worry about getting burned out? Do you ever feel a little stale? How do you stay fresh? Or are you just extremely driven?

Alex Hsieh: Well, I have my own work/life balance, probably a little different than the others. I work very hard. I work until probably 11 p.m. every day, Monday to Friday. Then Saturday and Sunday are my sports days and my family days. I have a family dinner every week with all family members. And I have a regular sport. I play badminton. I never play golf. Badminton for me is very efficient, within 20, 30 minutes your heartbeat can go to 150. So, I do that for over 10 years. And I also do jogging, weightlifting. So far, I still keep my body pretty fit.

Hugo Scott-Gall: And would you say that you have evolved as a leader over time? Do you think you perhaps have become better and faster at making decisions? Or are you still the same sort of leader you were a decade ago?

Alex Hsieh: Well, we have a very good team. In the recent three to five years, I hardly make any big decisions. It’s actually in the review meetings, we are making many of our small decisions together. In this industry, the ODM, UPS is a mature, slow technology change industry. Our competitor landscape, the supplier landscape, even the customer landscape, in the past 20, 30 years are almost all the same. And in the past 10 years, we even do not have newcomer coming into this industry because this is not really a sexy industry. For people wanting to create revenue within a short time, this is not their ideal industry to enter into. So, everyone in this industry uses almost the same technology or the operational process.

I always challenge my team, and say if everyone has nearly the same infrastructure, why would the customer want to award us with their order revenue? I think the key is efficiency. So, we are very strong in monitoring efficiency. I believe this is also the key value of myself in Voltronic, that I am monitoring the efficiency on every corner. So, that’s the reason why every day most of my time I’m spending in operational detail. And I also believe, maybe not workable with the other industry, but for UPS industry, it is details to decide win or lose. So, this is a very fundamental thing.

Hugo Scott-Gall: Do you spend a lot of time, I guess, on regrets or playing back decisions you’ve taken? Or are you quite decisive, once you’ve taken a decision, that’s it, don’t look back, we’re doing this?

Alex Hsieh: Fortunately, not much. Again, my personality has been educated by this industry. I think anyone, if they want to achieve something in our UPS industry, like I just said, there is nothing like short term. There is no way you can make quick money. Everything is layer after layer accumulation. Like the previous company I working for, Phoenixtec, is exactly the idea. The owner himself is a very good engineer, very decent, very honest, and looking into all of the operational things. I took that as a role model. I always tell him, we are still very good friends, I always told him, say in the seven years I was working for him, he taught me how to be an entrepreneur in the UPS industry.

And also, I think in all the owner, it’s a very easy to say yes to everything, but it’s always very difficult to say no because there are a lot of changes, a lot of temptation, attraction, that we have to take into consideration all the time.

Hugo Scott-Gall: Can you talk a bit about growth? So, maybe you can paint a picture of the growth opportunity for the company. Really, I’m talking just big picture about global power demand. It seems to be one of the strongest, well certainly a strong thematic growth area that the world needs more power. Alongside that is the world’s electricity grids, depends which country you’re talking about, but in many quite mature economies, there’s a need to upgrade grids. Therefore, there’s opportunity. And then if you think about where growth has been, obviously things like datacenters are adding extra demand for power onto systems that may well be fully-utilized, or are creaking a bit because they’re quite old.

So, could you talk a bit about the bigger picture, how you see demand for power globally evolving?

Alex Hsieh: For the big picture, I think two directions. First the direction is indeed the global energy demand definitely will continue to increase. So, because of that, the higher power rating products, we can also see they grow very fast. Taking ourselves as an example, we are already the largest ODM manufacturer in the world. However, in the past 10 years, our major revenue is coming from small to medium size UPS or inverter up to 20 kilowatts. However, we do see that above 20 kilowatts in very recent two years, the demand coming from our Tier 1 or Tier 2 customer increasing very fast. In this quarter, our high-power UPS, we have more than 40% growth.

So, this is the portion we used to be very small. Right now we do see they are a stronger opportunity. Along with the power rating increase, another is regarding the technology about efficiency. Going into datacenter or AI datacenter, the high efficiency is one of the must to have, the specification. So, I think UPS are also at a turning point. In the past maybe two, three-decades, technology change was pretty slow. But right now, from the hardware side, we are starting to use more and more new technology. The power component used to be most fed IGBT. Now more and more silicone carbine MOSFETs, more and more microprocessor control, VSP control.

So, this is one direction. Another direction is energy itself. They are transitioning from the traditional, the big power plant, one-directional power distribution to we call 3D, decarbonized, digitalize, and decentralize. So, a company like us, we are offering firm power generation, we are offering solar inverter from 1 kilowatts all the way to 200 kilowatt that’s for residential use and for, we call C&I, commercial and industry use up to we call decentralized power generation by solar. Another is we call digitalize, that we are using almost all products that are processor control, more and more computing features inside. Compared to 10 years ago, UPS is a very hardware product. Right now, the firmware, software digitalize are already very popular.

And decarbonized, that’s also key. We are very fortune we are making a lot of green products. Solar inverter, for example, we have pretty good penetration in many of the developing countries. For example, country in Africa, they have all the years very low levels of the green infrastructure. As a result, they have many of the load sharing power cuts. People are already getting used to use diesel generator as their second source of power generation. However, that’s polluted. That’s sometimes dangerous. So, we see right now, thanks to the much more affordable price coming from solar panel lithium battery, we see that there are more and more people replacing their diesel generator to solar inverter system.

And in many places, the solar electricity cost is even lower than the grid electricity cost people are paying for. So, they are not only for the grid, but also they have very obviously the financial incentive behind. Because of that, decarbonized, this is also one of the directions we are continuing to doing more. So, for example, we are continuing to enlarge our power rating of the solar inverter to enter into a large power, hundreds of kilowatts of solar inverter, together with hundreds of kilowatts of lithium battery as a storage unit.

Hugo Scott-Gall: When you look at some of the forecasts that exist for global power demand and datacenters, and datacenters obviously need to offer continuous service, do you think the estimates are too low or too high? Do you think that actually the world will need more power and has underestimated? Therefore, that has lots of consequences but obviously has positive consequences for you.

Alex Hsieh: Certainly, AI datacenters are booming, especially for last one to two years. In the beginning, there were a lot of very aggressive forecasts on the capex, on the spending of AI datacenter. You can see that the energy consumption of AI datacenter are much bigger than the regular datacenter. AI servers, for example, the regular server takes about maybe five to seven kilowatts. AI servers take three times more. Each server takes 20 kilowatts. So, you can see the NVIDIA, their infrastructure of the server rack, each server rack, they take 120 kilowatts, that’s a lot of power. And in the AI datacenter, easily they use hundreds of server racks. So, one datacenter, they take several megawatts energy coming from the grid.

So, as a result, people start to worry there is no grid infrastructure able to take this stress. So, then people are looking for alternative energy coming from wind or solar. So, I think that’s a good thing that a renewable product supplier like us, that we can also provide the energy source other than coming from the grid to the AI datacenter. However, I’m not convinced the AI datacenter will be able to build in the large quantity as people are seeing right now. Because after all, it’s not that easy to build almost in everywhere, a large AI datacenter. Instead, I think the H computing datacenter, they will be getting more and more feasible.

This is not a new idea. In datacenter time, there are already many industry people talking about on top of the datacenter, there are H computing. But it never happens because the AI datacenter, regularly, people still afford to build it quickly. However, AI datacenter, that much more difficult. So, H computing, meaning that they are still small size of the datacenter, but taking lower energy using small number of the rack system. And they can deploy much easy in many places. So, this is also another direction that we believe is good for us, especially we are very strong in small to medium size UPS.

Just imagine each AI datacenter, 120 kilowatts, we can install 100, 150 kilowatts UPS in each rack and together with the storage coming from lithium battery or super capacitor, that is also one of the products we are good at. So, that’s also providing us some more potential opportunity than before for future growth.

Hugo Scott-Gall: One more question, really. Back to being a leader, leader of people, two questions really, one, have you got better at assessing talent over time? And second is talent, is human capital a constraint on growth? Are you finding it hard to find enough good people to be able to execute your growth plans?

Alex Hsieh: You are absolutely right. Talent development is always challenging in UPS industry. Like I just reported, this is a very traditional industry for many years. Maybe 10 years ago, some of the younger generation, they like to work in more software instead of more hardware. Right now, young generation, they like to work for semiconductor instead of power industry. So, it’s always one of my key jobs to plan the talent development. I spend a lot of time coaching staff. I think maybe 80%, 90% of my time every day is talking, meeting, discussing with different tiers of our staff, even go up to the engineering level. I always believe this is the most effective way to pass my value, pass my insight about this industry to our staff, especially for young generation. Because many of them, they are still very young, they don’t have experience, their learning curve is very limited.

So, for us, we only need to spend a certain level of time. They can really broaden their view sight, many of their career plan. So, that’s number one. Number two, certainly, we are still a quite profitable company. So, we invest significant resources in talent retention. We offer good packaging, salary. In Taiwan, authority, every year they release the salary package. Voltronic is always in maybe the top 20 companies among the over 1,000 list of big companies. I think in the top 10, I remember the 2023, the list of the top 10, we are number 10. From number 1 to number 9, they are all semiconductor companies. Even us, we are coming from the power industry.

So, this is another thing, it’s very critical that we need to pay them well to incentive them to believe that this is the industry they can create value for their very long career period.

Hugo Scott-Gall: I think the main thing I’m taking away from this is you seem to really enjoy doing what you do. You founded the company in 2008 to 2025. But it seems to me that you skip to work every morning, is that fair?

Alex Hsieh: You’re right. I really enjoy working. But I always say to my team working is not play. Even though I enjoy, I think 90% of my time every day is with a lot of difficult, challenging, questions, etc. But already designing, this is my style of my work for many, many years.

Hugo Scott-Gall: Great, well Alex, thank you very much for taking the time. I really appreciate it. It was great hearing how you built the business, how the business can grow, and how you operate as an obviously very successful leader. So, thank you very much.

Alex Hsieh: Thank you so much.

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