At A.M.D., a Quiet Doer Gets His Due
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By Joe Nocera
The New York Times
August 5, 2006
I don't know if they told you this or not,” Hector de J. Ruiz said half-apologetically, as he sat down to lunch the other day, “but I don’t really like to talk about myself.”
I can’t say I was surprised. Mr. Ruiz, 60, is the chief executive of Advanced Micro Devices, a semiconductor company that would seem to have the most thankless task in business: competing head to head with mighty Intel.
Founded and long ruled by W. J. Sanders III, a man who loves both the good life and the limelight, A.M.D. had a history over the last decade or so of devising first-rate microprocessors. More often than not, though, it managed to snatch defeat from the jaws of victory, through a manufacturing problem or some other painful foul-up.
But in 2000, as he approached the age of 65, Mr. Sanders, who goes by Jerry, had the good sense to recruit Mr. Ruiz and install him as his potential successor. And since Mr. Ruiz took over as chief executive in 2002, the company has had a remarkable run.
Its Opteron chip, introduced in early 2003, was, until recently, better than Intel’s competing products. Under Mr. Ruiz, the manufacturing execution has been flawless, and as a result, the company has made serious inroads with I.B.M. and Hewlett-Packard — companies that had long been wedded to Intel microprocessors. For instance, A.M.D. used to have zero presence in the high-end, high-profit server market; today, it has more than 25 percent of that market.
A few months ago, even Dell, an Intel stalwart if ever there was one, agreed to start using A.M.D. microprocessors. And earlier this week, I.B.M. announced that it was expanding its use of Advanced Micro’s chips. A.M.D. remains a far smaller company than Intel, at one-tenth Intel’s size in market capitalization. But it is no longer just an annoyance; it has become a competitive threat.
And these good things have happened under a leader who could not be more different from A.M.D.’s patriarch. As I discovered this week, when you get Mr. Sanders on the phone, you pretty much can’t get him off. Mr. Ruiz, by contrast, is quiet — a good listener. He’s patient. Unlike Mr. Sanders, he doesn’t need to be the sun around which everyone else revolves. He doesn’t make instant decisions, as Mr. Sanders often did, but once he makes up his mind, he stays the course.
“Jerry’s leadership team was trained to check in with him before doing anything,” said Thomas M. McCoy, the company’s chief administrative officer. “Hector’s approach is that if you know what needs to be done, just go do it.”
And, as the man says, he doesn’t like to talk about himself. Which isn’t to say he doesn’t have quite a story. As Adam S. Parker, the semiconductor analyst at Sanford C. Bernstein put it, when you discover where he came from, and how he got where he is, it becomes “hard not to root for him.”
HECTOR RUIZ came, in fact, from Mexico. He grew up poor, the oldest of five children, in the small town of Piedras Negras, not far from Eagle Pass, Tex. As a child, he aspired to become an auto mechanic.
When he was around 14, though, fate intervened. Mr. Ruiz got to know a neighbor, a Methodist missionary named Olive Given, who saw his raw intelligence and sensed his potential. She took a keen interest in him and maneuvered to have him accepted at the high school in Eagle Pass. Every day, he walked the 45 minutes to Eagle Pass to go to school. When he started, as a sophomore, he knew little English. When he graduated, he was the class valedictorian.
From there he won a full scholarship to the University of Texas, where once again he excelled; by the time he finished his studies, he had a Ph.D. in quantum electronics and solid-state lasers from Rice University. He then talked his way into a job at Texas Instruments before being recruited to Motorola.
Motorola, where Mr. Ruiz spent more than two decades, is where he learned to be a manager. His first job was to oversee the building of a plant in Scotland; his last was as the head of the company’s semiconductor unit, which was in dire straits. “Within the first 90 days” of taking over the division, Mr. Ruiz said, “it was clear to me that we had way too many factories. I had to go to the board and say, ‘We have a problem and there is only one way to deal with it. We have to size the company down.’ ”
This he did, closing seven of 21 factories, laying off a staggering 20,000 people, and returning the division to profitability. Although he felt he had no choice, it was not a happy experience. “The role of the C.E.O. is to create opportunities for people,” he told me. “I believe that with a passion. When you don’t do that, it really is a terrible failure.” The huge layoffs earned him the moniker “Hector the Dissector.”
Here’s the funny thing, though. For a guy who laid off a lot of people, Mr. Ruiz certainly gained plenty of fans among those he worked with. His quiet, thoughtful manner inspired confidence, and his willingness to let people make some decisions without having to first consult him was empowering. That became clear after Mr. Sanders lured Mr. Ruiz to Advanced Micro Devices, where he began as the No. 2. “When he walked in the door,” Mr. McCoy said, “this flood of talent in the industry started banging on the windows. ‘Where is Hector? I want to come work for him.’ ”
His move coincided with one of the worst downturns in the history of the semiconductor industry. In 2000, at the height of the dot-com bubble, Advanced Micro was rolling in profits. Two years later, when he became chief executive, it lost $1.3 billion. The stock dropped to around $3.
“In times like that,” Mr. McCoy said, “people are looking for lighthouses in the storm. What we had with Jerry and Hector were two very poised and experienced leaders, who persuaded employees if they could keep their eyes straight ahead, we were going to be O.K.” (Mr. Sanders remained chairman of the board until 2005.)
Once again, Mr. Ruiz had to lay people off, though far fewer this time. He could see that the Opteron — which was code-named Hammer — was closer to becoming a reality, and that the chip would give the company a big advantage over Intel, which, because of its own strategic mistakes, didn’t have anything to compete with it. So he didn’t stint on research and development.
And he made a radical, bet-the-company decision. A.M.D. had always made its microprocessors for desktops, the least profitable part of the market. Mr. Ruiz decided that the Opteron had to be initially aimed at the server market, where the big profits were. “Going from desktop to server was not simple,” he said. “The two markets are so different. We needed to start thinking in completely different ways about what we did.”
Mr. Ruiz, meanwhile, went around to the PC makers, explained the company’s plan, and solicited their input. His quiet confidence convinced some of them as well. When the Opteron was unveiled in April 2003, representatives from I.B.M. stood on the stage with him and announced that they would use the chip. In time, both I.B.M. and Hewlett-Packard became big users.
To be sure, Intel has fought back fiercely. Its new chip, the Core2Duo, is aimed directly at the Opteron, and by all accounts, it’s the superior product. “Intel is doing to A.M.D. what A.M.D. did to Intel three years ago,” said Richard Whittington, a semiconductor analyst with Caris & Company. “Intel is in the driver’s seat.” Which of course now means that Mr. Ruiz and his team need to come to market soon with a next-generation microprocessor — and execute flawlessly. Somehow, this seems a lot more likely than it used to.
Surprisingly, when I called Mr. Sanders — who, incidentally, grew up dirt poor himself, in Chicago — he was grudging in his praise for Mr. Ruiz. Like many founders, he seemed to be having trouble letting go. Although he told me that Mr. Ruiz “has done an excellent job,” he was quick to point out that the Opteron was hatched well before Mr. Ruiz arrived on the scene. “I don’t think Hector is the risk-taker I was,” he said. When I mentioned Mr. Ruiz’s decision to attack the server market, Mr. Sanders claimed that that had actually been his idea. (“I have the documentation to prove it.”)
He told me that he thought his own accomplishments were being undersold and Mr. Ruiz’s were being oversold. “This is awkward for me,” he sighed. Then he said: “The king is dead. Long live the king.” It seemed not to occur to him that picking exactly the right person as his successor — and then having the grace to step aside — was one of his finest accomplishments.
As my lunch with Mr. Ruiz wound down, and he began to relax, he decided that he did have something he wanted to say about himself. “All my life,” he said, “people have said I was lucky. When I went to Eagle Pass to go to high school, the calculus teacher ended up really liking me. The chemistry teacher really liked me. So I developed relationships with people who helped me.
“Then I went to the University of Texas and the same thing happened. I was given all sorts of opportunities. And again, people said, ‘Boy, you’re really lucky.’ When I got to A.M.D., it already had a great manufacturing organization. And it had a great product in the works. Finally, I said, I can’t deny it. It has been a very fortunate life.”
The point he was trying to make was that what people missed were all the disappointments and difficulties along the way, such as struggling with his studies because he didn’t speak English, or laying off valued employees. But I had a different thought as I listened to him. Some people know how to make their own luck. Hector Ruiz is one of them. |
