LONDON Pasquale Pistorio, the driving force behind ST Microelectronics for many years and now honorary chairman of the chip group, gave a bravado and uplifting talk to delegates of the International Electronics Forum in Geneva.
Pistorio is now chairman of French wireless communications groupSagem, and holds several other non-executive directorships.
His wide-ranging address began by exactly why so many decades ago he chose to go to Motorola and be an (often bicycle riding to clients) chip salesman there rather than take a position with Olivetti. Of course it was more money and finance was also a major theme of his talk.
"This financial crisis, caused by crazy, greedy financiers, has been worse than any and because of a lack of principles and controls almost led to a total collapse of the global economy," said Pistorio. He added we may have reached bottom, "but recovery will be slow, and we may likely meet some hiccups along the way."
Focusing on the semiconductors sector, Pistorio said things have changed but the fundamentals are the same.
He also elucidated on a number of basic principles and opportunities CEOs of a semiconductor company should, indeed must, focus on today.
First, it is clear that because of the financial crisis and government intervention "the time of easy money is gone. For the next several years, it will be difficult to get credit. To raise money on the markets or borrow from the banks will be difficult. Companies must generate their own cash. They will need to look at P&L more tightly than ever, as well as the balance sheet."
"The cake is smaller and will grow bigger slowly and more people are eating the same cake. The consolidation in semiconductors which I predicted in 1986 has not happened. Why not? Because the foundries eliminated the barriers to entry, and because, with the easy money of the 90s and 2000s, everyone had money to burn."
Note to CEOs.
"The consolidation process will now accelerate. I would love to be a CEO today because I could go shopping like crazy. You can get companies cheaply. Qimonda and Spansion have gone. NEC and Renesas have merged. ST-Ericsson is a consolidation in wireless."