LSI Boss Expects 'Hard Landing'
For Chip Industry
(02/23/01, 8:40 p.m. ET) By Will Wade , EE Times
MILPITAS, Calif.—LSI Logic Corp. chairman Wilf
Corrigan saw it coming in mid-December, when
customers, seemingly in concert, stopped ordering.
Now, the man who is arguably the dean of the ASIC
industry warns that the downturn in the semiconductor
arena is "much more severe than anybody has said."
Whether it turns out to be a short-term slump or a
full-blown bust, Corrigan is banking on
communications—which now represents half his
company's revenue—to bring the industry back to life.
The question is when.
"I think we are in a recession right now, and that we are
looking at coming in for a hard landing," said Corrigan,
who founded LSI (stock: LSI) 20 years ago after
running divisions at Fairchild Semiconductor Corp.
(stock: FCS).
"People keep talking about a soft landing," Corrigan
said. "Well, I keep looking around for the people who
are sitting on pillows, and I just don't see them."
Even as the company girds for what may be a rough
year, its chairman and chief executive officer foresees
plenty of growth prospects coming down the pike.
Despite the dot-com bust, the Internet infrastructure
remains a huge opportunity, Corrigan said, as are home
networking and video-on-demand.
Corrigan pointed out that media mogul Rupert
Murdoch, who has a knack for discerning consumer
trends, has invested heavily in a video-on-demand
service.
Moreover, the company has forged what Dataquest
Inc. analyst Gary Smith called a "brilliant" business
strategy that can wring multiple revenue sources from
any one product.
"I think they are very well positioned for the coming
year," said another analyst and former LSI Logic
employee, Cary Snyder.
One nagging concern is the familiar problem of a
leadership gap, triggered by the departure last year of
Corrigan's erstwhile heir apparent, John Daane, for the
top job at Altera Corp. (stock: ALTR).
At 62, Corrigan shows no signs of letting go of the
reins. That means "there is no place to go for the top
people," said Smith, "and [Corrigan] has to cycle
through new people every five to 10 years."
LSI Logic is coming off of its best year ever, and is still
selectively hiring: More than 400 engineers (the
company employs 2,300 engineers worldwide) and
other job seekers turned up at a recruiting event early
this month.
But in a wide-ranging interview, Corrigan seemed
almost squeamish about predicting 10 percent revenue
growth for 2001.
Research firm IC Insights, Scottsdale, Ariz., recently
lowered its growth forecast for the entire semiconductor
segment, predicting just 7 percent growth this year and
9 percent in 2002.
LSI Logic's sales rose to $2.74 billion in 2000, with net
income of $417 million.
Revenue was up 31 percent over 1999, and profits
soared by an impressive 140 percent, as improved
productivity allowed each completed design to generate
more income than in any previous year. |
