Of cabbages and kings-a potpourri
09/01/1997
Of cabbages and kings - a potpourri
As Tweedledee said to Alice:
"`The time has come,` the Walrus said,
`To talk of many things:
Of shoes - and ships - and sealing wax -
Of cabbages - and kings -
And why the sea is boiling hot -
And whether pigs have wings.`"
Information technology and its foundation, semiconductor technology, are so multifaceted and dynamic that every now and then we have to take stock of them in relation to the way our industry works. We need to re-establish a vision of the industry, while trying to make some sense of it.
What, then, are the pieces that are important either in and of themselves or as representatives of some bigger issue, to which we can extrapolate?
Litigation: Intel holds all the chips. Digital Equipment Corporation`s recent lawsuit against the world`s leading chipmaker, Intel, is indicative of how legal maneuvering has changed our modern business climate.
Litigation has become a standard tool of business strategy. It matters not whether the patent infringements are actually valid. What matters is the business relationship between the suer and the sued and what strategic marketing positions can result. In the case of Digital, a desperate CEO is making a clear attempt to regain stockholder confidence. People may be screaming for Ken Olsen to come back just as Steve Jobs may be slouching back toward Apple. The recent Applied/Varian/Novellus lawsuits may have similar implications. The only ones who will profit are lawyers, who, like cockroaches, survive all catastrophes.
CEO talent: Where have all the good guys and gals gone? Bob Palmer managed a fab before he became chairman and CEO of Digital. John Walter of AT&T, the recent flop, came from Donnelley, a printing company. Kudos to the executive search agency that sold this man to AT&T; I would like them to sell the Brooklyn Bridge for me. Still, Walter left after eight months with a hefty severance package. Another company luminary, ex-Apple executive Gilbert Amelio, came from National Semiconductor and couldn`t cut the mustard in 17 months, not that it was an easy task rescuing a company with a cult product and no market.
Where do we find good industry leaders? Where do boards of directors look for talent? The semiconductor industry seems to be somewhat immune from this hiring tailspin, as many of the CEOs have risen from the working core of the companies and the technology they managed. But the current crazed acquisition atmosphere may soon change this strategy.
Economy: Technology is strong; let`s make hay while the sun shines. The strong economy is forgiving to minor company blunders. So, let`s keep our blunders minor. Selecting an inappropriate CEO and having the business flounder for a year or more is unacceptable to stockholders. The sad story is that semiconductor manufacturers must rely for their health on the computer manufacturers getting it right. Considering the bad decisions that have been made at the highest levels in major companies, I`d be concerned.
Foreign relations: Determine carefully whom we call names. Is the US government a friend or enemy of business in regard to China? That country holds the biggest untapped world market for our goods, including semiconductor-based products, so let`s stop the China-bashing. If we are going to err, let`s err on the side of conciliation, not antagonism. In the hearings regarding China`s efforts to influence US elections, we should look inside our own household, where we shall find much more egregious sins with our lobbying efforts. Why not befriend China? We could create a huge world economy with a market that would dominate worldwide growth and stability. Write your senator to stop this bad judgment.
Appropriately, Alice asked, " `Which is the best way out of this wood?`...But the little men only looked at each other and grinned."