The lion, the chip and the wardrobe |
In an industry where success is often measured in billionths of a meter, storytelling hadn’t been among the list of skills I thought semiconductor executives needed.
The head of Marvell Technology Inc. changed my mind. Matt Murphy, who runs the $73 billion chipmaker, was able to expand the company’s outsourced production capacity while competing with practically the whole industry, which simply can’t get enough chips right now. The move helped Marvell deliver strong earnings and an 18% stock boost in a single day.
Telling a good story was key to this feat, Murphy said. He persuaded gatekeepers at Taiwan Semiconductor Manufacturing Co., the biggest provider of outsourced manufacturing, to assign more of its output to Marvell by pitching a growth story. Marvell will be able to put every chip to use, he told TSMC. “They want to ultimately be efficient and make sure what they ship doesn’t end up in inventory,” Murphy said.
TSMC and its peers currently have far more orders than they can deal with. The output of factories in Taiwan determines which of the world’s automakers, smartphone builders and refrigerator designers get what they need to build products that all depend on electronic components. Of the six executives I interviewed last week on the topic, none expected any supply improvements before the second half of next year.
One person who will need to exercise his persuasion skills soon is Intel Corp. Chief Executive Officer Pat Gelsinger. He’s making his first visit to Asia since becoming the leader of the world’s largest chipmaker in February. He’ll meet with TSMC officials there, and the outcome of his negotiations could have major consequences.
Like Marvell’s Murphy, Gelsinger needs supply. He could be placing some of the first-ever large order for the most advanced chips TSMC makes. Or the meetings could be more difficult. It was only in March that Gelsinger said his long-term plan for Intel was to compete directly with TSMC. If successful, Intel will return to making its own high-end chips exclusively, produce others in new plants built specifically for outsourced manufacturing and steal market share from TSMC.
Perhaps the trickiest story to spin is the one facing Nvidia Corp. CEO Jensen Huang. The U.S. sued to block its deal to buy the British chip designer Arm Ltd. Margrethe Vestager, the European Union’s antitrust chief, piled on last week, saying Brussels regulators are “deeply concerned” by the proposed acquisition.
Arm’s technology is used by everyone from Amazon.com Inc. and Apple Inc. to Qualcomm Inc. as the basis of their chip designs. Nvidia competes with several of them. Approval for the deal, announced more than a year ago, always hinged on Nvidia’s ability to persuade Arm’s many global customers that it will remain neutral.
Nvidia says the company won’t give itself priority over other customers. The regulatory actions, often influenced by recommendations from competitors, indicates Nvidia has a lot more work to do to convince everyone of its side of the story. —Ian King