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2013-05-07 07:43:22
May 2nd 2013, 20:29 by M.G. and P.L.| SAN FRANCISCO AND LONDON
IT S all change at the top of two of the world s leading semiconductor
companies. On May 2nd Intel, the world s largest chip-maker, announced that
Brian Krzanich (pictured above), the firm s current chief operating officer,
will become the sixth chief executive in the firm s history. Mr Krzanich, who
will take over as boss on May 16th, replaces Paul Otellini, who unexpectedly
announced last November that he would be resigning as Intel s boss.
ARM, Intel s British rival, is also changing its leader. In March Warren East,
the company s chief executive, said he would stand down in July after 12 years
in the top job. Like Intel, ARM has chosen an internal successor, Simon Segars
(pictured below), who has been running the company s intellectual-property
divisions and is also the company s president.
Mr Krzanich faces the harder challenge of the two. Intel rode to greatness on
the back of the personal computer (PC). Its microprocessors are in most PCs and
the server computers that are found in data centres and offices. But PC sales
have been falling sharply just as sales of smaller mobile computing devices
have taken off. IDC, a research firm, reported that shipments of PCs in the
first quarter of 2013 plummeted by almost 14%.
Intel s new boss will have to come up with a strategy to deal with this shift
in the technology landscape and arrest the decline in Intel s net profit, which
fell from $13 billion in 2011 to $11 billion last year. Most important, the
company needs to come up with creative ways to boost its sales in the rapidly
growing markets for smaller computing devices, such as tablet computers and
smartphones, where it has struggled to make headway.
One way to boost revenues and profits will be to come up with more innovative
software applications that can be combined with Intel s chips. It is probably
no coincidence that at the same time it announced Mr Krzanich s elevation,
Intel s board also promoted Renee James, the head of the company s software
division, to president.
Mr Segars has an easier task ahead of him. ARM makes no chips of its own (and
so is a fraction of the size of Intel), but it designs chip technology that
others, from Apple and Samsung to NVIDIA and Qualcomm, license and then build
on. ARM s low-power, battery-saving chip designs have been just what the
mobile-device market needed.
Granted, not everything with an ARM-based chip in it turns to gold. Sales of
the Surface RT, a Microsoft tablet, have been poor. Even so and despite Intel s
best efforts to make inroads into its territory ARM said on April 23rd that its
revenue had risen by 28% in the year to the end of March 2013, reaching 170.3m
($263.9m) and its pre-tax profit had gone up by 44%, to 89.4m.
As the table from IC Insights, another research firm, shows, Intel is still a
formidable force. Last year it even extended its lead over the second-biggest
chipmaker, South Korea s Samsung Electronics. But the world s fastest-growing
chip company was America s Qualcomm, which leads the market for smartphones
application processors (the brains of the devices). And Taiwan Semiconductor
Manufacturing Company (TSMC), which makes chips for many of Intel s rivals
including Qualcomm, which has no factories of its own also saw its business
grow strongly. Mr Krzanich and Intel have quite a battle on their hands.