The Infineon soap opera continues

Ziebart's year at Infineon
LONDON — On his arrival from tire and automotive electronics company Continental AG in 2004 Wolfgang Ziebart, the incoming chairman and chief executive officer of German chipmaker Infineon Technologies AG, appeared more "straight-laced" than his predecessor, the charismatic Ulrich Schumacher. But Ziebart still managed to take observers through an exciting year, culminating in a plan to break up the company.

Schumacher had presided over what often seemed like a soap opera as he tried to manage relations with different far-eastern joint venture partners. It became even more like a soap opera when it produced a blockbuster episode focused on Schumacher’s departure from Infineon under tempestuous circumstances.

But Ziebart was not to be outdone. During 2005 he has gone from saying that a break-up of Infineon would be “not appropriate”, to setting in motion the spin-off the company’s memory business and adopting a fabless strategy for the remainder of Infineon. Ziebart has described the strategy as “fablite,” saying that existing Infineon fabs would continue to operate for “quite a while.” But the pledge not to invest in manufacturing beyond the 90-nm node has a clear end point, and could save Infineon a lot of money.

The year started with a stutter from the CEO, as Infineon said it had decided to abandon the sale of its laser and fiber optics subassembly business to Finisar Corp. because of delays. However, a few days later the two companies had patched up their differences and the deal had been put back together, but only to include optical transceivers. There were reports that three plants had to close as a negative impact of the recast deal.

But there was no planned closure in Virginia in the U.S. and in February Infineon was giving guided tours of its 300-mm memory fab near Richmond, Virginia, as it installed equipment as part of $1 billion expansion. The strategy was to invest during the downturn the company said — or was it to finish the fab, make it look nice, and prepare the memory part of Infineon for sale?

A boss of mine once advised me: “Watch out if the company you work for starts painting the lobby.” A billion dollars is major paint job but the principle would be the same.

But in June Ziebart was denying the possibility that the memory business was being prepped for spin-off. Ziebart said he has no plans to break up the company by spinning off its memory chip operations denying a previous report in Handelsblatt which had said Infineon was considering an initial public offering of shares in the memory business. "The measures that outsiders recommend are not appropriate," Ziebart was quoted to have said at the time.

But in July the memory business lost a potential advocate as Andreas von Zitzewitz, a senior executive at Infineon and its former head of memory products business group, resigned after allegations were made by Udo Schneider, managing director of BF Consulting GmbH regarding past motorsport sponsorship contract payments.

In September Handelsblatt said that an Infineon supervisory board meeting was scheduled for Nov. 17 specifically to approve a proposal to sell the memory division and, according to reports, Handelsblatt added that, despite his protestations otherwise, Ziebart had been planning the move since he took over at the company a year before.