10 gaffes: What were they thinking?

Maybe common sense is not so common, especially in the hi-tech industry.  I wonder who makes those blunders, executives with engineering background or executives without engineering background.

EE Times

Every once in awhile, electronics firms or individuals who work for them do something that makes everyone else in the industry scratch their heads and, perhaps, wince. We are talking about actions and decisions that—while they may seem perfectly logical to those making the decisions—don’t really add up in the minds of most people.

Perhaps it is the tough economy increasing the pressure and forcing acts of desperation, but it seems to us that there have been an inordinate number of examples of these head scratchers to come to light in recent months. EE Times has compiled a list of 10 moves that, in our opinion, can be called questionable. (We welcome comments in the forum below.)

1. IBM mum on layoffs

IBM has quietly let go some 10,000 workers in recent months, according to an IBM workers labor union. Big Blue has for the most part declined to comment on these layoffs (though a human resources vice president told the New York Times that the company is in constant transformation, eliminating jobs in some areas while adding them in others). Speculation by the union and others is that IBM is keeping layoffs on the down low in order to stay under the radar. But, if so, this policy has backfired miserably, with every whisper of an IBM job reduction attracting greater scrutiny and more distrust/publicity courtesy of the union.

2. The paranoid goof up

In May, the European Commission charged Intel with at least eight violations involving rebate payments to Acer, Dell, Hewlett-Packard, Lenovo, NEC and Media Saturn Holding, owner of the MediaMarkt retail chain. It levied a fine of $1.45 billion against the processor giant, its largest fine to date. Intel claimed it has evidence that will refute the European Commission’s conclusion that the company has engaged in anti-competitive business practices. But why did Intel bother with any alleged bad behavior in Europe, or, for that matter, in Asia and the U.S. in the first place? It was plain silly. Its rival, Advanced Micro Devices Inc. (AMD), never seems to get its act together and stumbles over its own feet. Intel usually wins over AMD by default.

3. Jobs’ next job

It’s hard to fault Apple Inc., one of the few high tech companies sailing relatively smoothly on the wings on the iPhone and iPod through the historic downturn. But the company failed the candor test this year when it disclosed January 5 its chief executive had “a hormone imbalance” then came back less than ten days later to say the iconic Steve Jobs would take a six month medical leave. A week later the SEC opened an investigation of just what was going on. Since then, much of the reporting on Apple has focused on the mystery of Jobs’ health. After a decade as CEO, we think it’s time for Jobs to get a succession plan and be transparent about it.

4. Hwang’s gaffe

Once upon a time, Hwang Chang-gyu, formerly the head of Samsung’s chip unit, devised something called ”Hwang’s Law.” Taking a page from Moore’s Law, ”Hwang’s Law” implied that NAND transistor count would double every year. Samsung pushed that idea with its own NAND product efforts. Others followed. The idea worked–and backfired. NAND scaling has enabled cheap MP3 players, USB drives and solid-state drives. But NAND scaling in part has also caused excess capacity–and vast losses–among vendors. This was not entirely Hwang’s fault, but he took the fall. He was demoted and ultimately resigned from Samsung earlier this year.

5. Microsemi-gate

Chip maker Microsemi Corp. assessed penalties against its president and CEO, James Peterson, after determining that he misrepresented his academic credentials. Microsemi fined Peterson $100,000 and forced him to forgo his annual bonus (worth an average of $680,000) after it came to light that Peterson did not have the bachelors or masters degrees he claimed from Brigham Young University. Prior to the proving of the allegations, Peterson sharply denied them, claimed his academic record was being confused with another man with a similar name and questioned the credibility of the person who first brought the lie to light, Barry Minkow of Fraud Discovery Institute. Peterson remains president and CEO of Microsemi. A high-ranking Broadcom executive was reportedly fired last year for falsely claiming to have degrees from the University of California at Irvine.

6. MIPS’ analog divorce

Analog is the hottest thing since sliced bread. Not for one IP vendor. MIPS Technologies Inc., which in August 2007 bought Chipidea, a Portuguese analog and mixed-signal IP company for $147 million, in May divested its analog business group to Synopsys Inc. in an all-cash transaction for $22 million. The marriage lasted only 18 months. At the least the divorce went well.

7. Bad memories

As part of its plan to bail-out Taiwan’s loss ridden DRAM sector, the Taiwan government proposed consolidating all of the island’s DRAM makers into a single company. Thus far, the DRAM vendors have refused. Even a pro-Taiwan lobbying group is mystified. The Taiwanese government plan to consolidate the island’s DRAM industry around the government-backed Taiwan Memory Co. (TMC) remains unclear and could do more harm than good, according to a recent report from that group. TMC may never get off the ground.

8. 450-mm fab dreams

Intel, TSMC and Samsung are separately pushing for 450-mm ”prototype” fabs by 2012. International Sematech is spearheading the effort. Late last year, Sematech updated its 450-mm fab roadmap–amid the worst downturn in the equipment industry. At a Sematech event, no one explained who would pay for the R&D or the 450-mm tools. One analyst said it best: Semiconductor equipment companies should boycott development of tools for the transition to 450-mm wafers, saying chip gear vendors were the losers in the transition to 300-mm wafers and would likely not benefit from the next move to larger wafers.

9. Selling out is OK

Fab automation vendor Asyst Technologies Inc. rejected takeover bids from Aquest Systems Corp. and others last year. Since then the company has filed for bankruptcy and has been all but begging for a buyer. The firm’s CEO resigned in April and it was delisted from the Nasdaq stock exchange. Similarly, fab tool vendor Axcelis Technologies Inc.rejected bids from Japan’s Sumitomo Heavy Industries Ltd. last year. Since then, the company has cut hundreds of workers, been sued by its stockholders, and was forced to sell its stake in a Japanese joint venture to a partner. The company’s stock price has declined from nearly $6 per share a year ago to just over 50 cents per share as of June 8.

(tie) 10. ATE standards are proprietary

Standards in automatic test equipment (ATE) look good on paper, but they certainly don’t work in the real world. ATE vendors simply can’t agree on anything; they hate each other. And consortiums don’t work too. For example, the Semiconductor Test Consortium Inc. (STC) was formed in 2003 to devise ATE standards. The end result: The STC flopped and Japan’s Advantest built a proprietary tester for Intel. Then, last year, Advantest, Amkor, Infineon, Intel, LTX-Credence, Qualcomm, Roos Instruments, Teradyne, and Verigy formed a new organization to devise ATE standards in an effort to lower test costs. The group, called Collaborative Alliance for Semiconductor Test or CAST, recently discontinued its operations and was folded into the SEMI trade group. CAST is still alive but don’t look for ATE standards in the future.

(tie) 10. Fister fumbles

Cadence Design Systems Inc.’s bid to buy Mentor Graphics Corp. last summer may have been the final nail in the coffin of the Michael Fister regime. Fister was known to think big, and the acquisition of Mentor would certainly have been that. Mentor was initially uninterested, but later grumbled that Cadence did not follow through with face-to-face negotiations. A few months later, Fister was gone and a humbled Cadence was watching its sales tumble as it started back on the path to a ratable business model. Ironically, the $1.6 billion that Cadence initially bid for Mentor was close to the amount of the loss that Cadence eventually reported for the fourth quarter of 2008.

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