CFOs Are Tough to Land in the Semiconductor Sector
May 09 2016 - 6:58PM
Dow Jones News
By Tatyana Shumsky
Help wanted: A Silicon Valley finance chief to navigate
uncharted waters in the semiconductor industry. Must be able to
counteract plateauing sales and thinning margins while downsizing a
global workforce.
Intel Corp. may have a tough time filling the CFO vacancy left
by the promotion of Stacy Smith to an operational role last month.
The company needs someone with experience pivoting product
portfolios, reducing head count and cutting costs after years of
fast-paced growth.
Intel isn't alone. Chip makers Marvell Technology Group Ltd. and
Qorvo Inc. also are looking for new CFOs.
"It's difficult to find people qualified to do that role," said
Deepon Nag, analyst with Macquarie Group. "The semiconductor
industry is a very complex industry...and it requires someone who
is familiar with all these parts."
The shift in job requirements coincides with personnel
volatility. About one-third of semiconductor companies changed CFOs
in the last 12 months, according to executive recruiter Korn/Ferry
International. That is twice the rate for the largest 1,000 public
and private U.S. companies that Korn/Ferry tracks, resulting in
shorter tenures -- four years, compared with 5.3 years for the
recruiter's broader index of companies.
The person taking over Mr. Smith's role will have to reduce
Intel's reliance on personal computing, slash head count by 12,000,
or 11%, and deliver annual savings of $1.4 billion by mid-2017. The
person also must advance Intel's cloud-computing efforts, extend
chip usage in Internet-connected devices and expand the company's
memory chip business.
"The CFO role at Intel is a challenging job...Intel's next CFO,
whether from inside or outside the company, will inherit a
world-class team and a company that is growing and financially
strong," Mr. Smith said in an emailed statement.
While Intel may welcome an external hire, the next CFO is likely
to come from within the semiconductor sector. Boards and executives
tend to want someone who understands the risks associated with the
industry, recruiters say.
"The more knowledge you have in all of the senior management
roles about the likely future of the sector, the better off you
are," said Bruce Kimble, a principal at executive recruiting firm
Heidrick & Struggles who focuses on the industry. "All of our
boards and CEOs are looking for people with that depth, because it
just helps to be part of the senior decision-making."
CFOs appointed in the past year at Linear Technology Corp. and
Xilinx Inc. were internal hires.
Don Zerio joined Linear as controller in 2003, becoming CFO last
year. Even though he had more than a decade of experience at the
company, additional "study" was needed, he said, because the CFO
role called for greater involvement in crafting the company's
growth strategy.
"I need to be a financial partner with the rest of the
management team to help them grow the business," he said. "I don't
think at Linear, you were looking for the CFO to help grow the
business, you were looking for the CFO to help squeeze more profit
out of those sales."
Xilinx, Marvell and Qorvo didn't respond to requests for
comment.
Still, industry CFOs in the throes of reallocating capital from
flagging business lines and evaluating acquisition opportunities
face a long slog. It can take years for billion-dollar investments
in new technologies to reach the market.
"There's not much that we can do quarter to quarter to influence
our sales. The things that we do take many years," Mr. Zerio
said.
Dan Durn, CFO of NXP Semiconductors was finance chief at
Freescale Semiconductor, which merged with NXP last year. He
likened his role to defending a quarterback -- or in this case, the
chief executive -- "making sure everybody is in their positions and
executing the play that was called."
In practice, Mr. Durn analyzes NXP's spending to ensure it
advances the company's pursuit of leading positions in various
kinds of technology, such as providing chips for near-field
communication and encryption, he said.
Overall, CFO vacancies at semiconductor companies are likely to
need people who can lead transformational change, given the current
dynamics of the sector.
That's what drew Colette Kress to Nvidia Corp. in 2013. The CFO
role appealed to her because it required someone to drive the
company's transformation from a seller of individual hardware to a
provider of a broad base of networks and services.
"The best thing I could tell any type of CFO coming in: Be
careful how much time you spend thinking about the trends that
you've seen in the past and have a good understanding of how
quickly things could move going forward."
Write to Tatyana Shumsky at tatyana.shumsky@wsj.com
(END) Dow Jones Newswires
May 09, 2016 18:43 ET (22:43 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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