Qualcomm CEO: We are very anxious
Latest update time：2021-10-09 16:55
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Source: The content is compiled by Semiconductor Industry Watch (ID: icbank) from the " Wall Street Journal ", thank you.
Months before Cristiano Amon started as Qualcomm Inc.’s chief executive, he was already dealing with his first crisis. To address it, he sat in a nearly empty conference room in Taipei and pleaded with executives at one of the world’s largest semiconductor makers for more chips.
He needed help so that Qualcomm, which designs circuits for hundreds of millions of electronic devices each year, could expand into new markets and meet the needs of big customers such as Apple Inc., Samsung Electronics Co. and China's top phone makers. He needed the help so badly, in fact, that he got permission from the Taiwanese government to arrive in March, then waited out a three-day quarantine period. Once he and his team arrived at a meeting point at a Taipei hotel, they held talks with their peers in a large room equipped with microphones and speakers.
"I'm a big believer that sometimes you have to meet people in person," said Mr. Amon, who was named chief executive in January and officially took over in June.
Many new CEOs in the business world have had to adjust to their roles under unprecedented pandemic-era restrictions, recognizing key employees without meeting them in person and managing offices and business relationships from afar. Few can say they have endured a more turbulent transition than Mr. Hamon, a gregarious Brazilian who enjoys human interaction.
He is navigating a series of major challenges — a global chip shortage, a sudden shift in a key market and an unexpected acquisition opportunity — while trying to put his own stamp on a company after more than two decades at it. He wants to focus on expanding beyond Qualcomm’s core mobile phone chip business, a shift that began before he took over.
“I was doing so many things at once, and I wanted to be successful at everything,” he said in an interview. “I had to do it because we were in a rush.”
But investors don’t seem to have enough trust in the new CEO. As of Thursday’s close, Qualcomm’s stock price had fallen to $127.84 from around $152 on the day he was announced as the next CEO. Srini Pajjuri, an analyst at SMBC Nikko Securities America, said investors were not confident about how long the company could benefit from the transition to the ultra-high-speed next-generation wireless standard known as 5G, and they were reserved about whether Apple would start making its own mobile phone communication chips.
Jeffrey Helfrich, a portfolio manager at Dallas-based Penn Davis McFarland, which owns Qualcomm as one of its largest holdings, said Mr. Amon’s pursuit of new markets was the right strategy. But he said the company needed to stay ahead in technology and avoid a recurrence of old woes, including a legal dispute with Apple over how to collect royalties for innovations in smartphone technology. Qualcomm and Apple settled that fight in 2019.
"Do you think their dispute with Apple is over forever? I don't," he said.
Short honeymoon
A graduate in electrical engineering from Universidade Estadual de Campinas outside São Paulo, Mr. Amon worked for multinational telecommunications companies in Brazil and twice at Qualcomm, in 1995 and 2004. The 51-year-old father of three was a rising star at the company for many years and became president in 2018.
Qualcomm was founded in 1985 by a group of engineers led by Irwin Jacobs, who became its first chief executive. His son Paul succeeded him and handed the reins to Steve Mollenkopf in 2014. The leaders pioneered the method of connecting phones to cell towers and made Qualcomm a ubiquitous player in cellular equipment. Mr. Mollenkopf, who is known for his taciturnity, has seen the company through a turbulent period of litigation, antitrust scrutiny and a hostile takeover attempt by rival chipmaker Broadcom Inc.
Irwin Jacobs was one of the founders of Qualcomm and became its first CEO.
Mr. Amon is a stark contrast to Mr. Mollenkopf, who retired in June. His outgoing style is well suited to the task of attracting new customers and finding new business. Mr. Amon has shaken up the company’s management to help with the transition, bringing in about 20 new executives. The group includes people with backgrounds in cloud computing, personal computers and automotive technology, he said.
He didn’t have much time to adjust to the job. Shortly before getting the nod, he had a bout with Covid-19, which he contracted around Christmas. After recovering, he continued to travel the world to address a severe chip supply crunch that has driven up electronics prices and hampered production of everything from cars to appliances to personal computers.
The shortage, which he expects to ease in the first half of 2022, puts Qualcomm in a tough spot. While the company designs communications and data-processing chips, it relies on others to make them, meaning it doesn’t fully control its own destiny. Securing manufacturing capacity is critical to Mr. Amon’s long-term desire to put Qualcomm’s chips in more cars, drones and other devices.
Mr. Amon’s first stop after being named CEO was South Korea, followed by a trip to Taiwan in March before returning to South Korea in May. Those countries are home to some of the world’s largest chipmakers and major Qualcomm suppliers, including Samsung Electronics Co. of South Korea and TSMC of Taiwan.
Before he got the top job, Mr. Amon was a frequent visitor to these places, meeting with industry partners. But the pandemic and global chip shortages made this year’s sojourns feel unfamiliar. Everywhere he goes, he faces the same draconian anti-coronavirus measures, such as Taiwan’s government escort from the airport to a government-approved hotel that he cannot leave. When in Taiwan, Mr. Amon usually patronizes the original location of Din Tai Fung, the famous dim sum restaurant. But Covid has forced him to cancel that ritual.
'Pressure cooker'
Qualcomm is also vying for a bigger share of China’s market for mobile phone chips. The fight has intensified over the past year after U.S. restrictions on Huawei Technologies Co. crippled the Chinese telecom giant. Huawei makes many of its own chips, and the companies have scrambled to grab market share from Qualcomm and its rivals.
To encourage suppliers to increase Qualcomm’s manufacturing capacity, Mr. Amon took the rare step of agreeing to pay for supplies in advance and to sign longer-than-usual contracts. Mr. Amon said he sensed concerns about chip shortages from Qualcomm’s customers, even those that don’t buy directly from the company.
“I can’t find a single customer that we haven’t been pressured by, directly or indirectly,” he said. “It’s a pressure cooker right now.”
Qualcomm's production lab in San Diego in 2019.
Mr. Amon has also met or spoken with the chief executives of defense contractors, industrial companies and numerous automakers as part of his efforts to diversify Qualcomm’s customer base away from phone chips. He struck a deal with French automaker Renault SA to use Qualcomm chips in its upcoming electric vehicles.
When he took over, he said, people advised against anchoring himself to a long-term strategy too early. But he decided anyway to present a detailed five-year plan to all Qualcomm employees in a three-hour presentation this summer. He hopes employees will find motivation when they understand how their work aligns with the company's goals.
Qualcomm's push into the automotive industry comes as more automakers are now using semiconductors in dashboard displays, driver-assistance features and other applications.
That strategy produced the biggest surprise of the young CEO’s tenure — a multibillion-dollar acquisition of an auto-technology company that makes sensors that allow computers to play a bigger role in driving. But they had to spend more to snatch the Swedish company, Veoneer Inc., from competing bidders.
Qualcomm already works with Veoneer to develop self-driving systems, but Veoneer's management wanted a buyer that could give it enough scale to compete with the likes of Tesla Inc. and Intel Corp.'s driving technology unit Mobileye. When Canadian auto company Magna International Inc. bought Veoneer for $3.8 billion in cash in July, it threatened Qualcomm's self-driving strategy.
Mr. Amon first sought $2 billion for Veoneer’s stake in the self-driving partnership, then raised his offer to $2.5 billion in July. Veoneer’s CEO instead asked Qualcomm to bid for the entire company. In August, Mr. Amon offered $4.6 billion, and this month the Swedish company accepted the bid from Qualcomm in partnership with an investment firm.
The deal put Mr. Amon, who is now CEO, on a busy spree. One thing Mr. Amon regrets about his first few months is how little time he had. “I was short on chips and short on time,” he said. “We were in a hurry. We had a lot to do. We had to diversify and reposition Qualcomm, and time was running out.”
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