There is probably no worse time than now — in the midst of pandemic — for any executive to take over as NXP new CEO...
There is probably no worse time than now — in the midst of pandemic — for any executive to take over as head of a $8.88 billion global chip company. NXP new CEO Kurt Sievers allows that “is absolutely a fair point.”
In March, NXP publicly announced the promotion of Sievers, president of NXP since 2018. At that time nobody was expecting such “a deep pandemic situation,” said Sievers. Of course, “you saw the early signs then, but it wasn’t clear.”
Thus, Sievers never thought the timing was all that terrible. Further, in early days of the pandemic, “I would not have expected how the team, how the company would show such an incredible flexibility, by adapting to the new situation.” Had he been asked ten weeks before, Sievers said, “I would have wondered, ‘Can our R&D force, for example, with 90% of the people working at home, still deliver KPIs? Can they still do tape-outs [of new chips] on time? Can they still improve test patterns?’ I would have probably said, no, this will be very, very difficult.”
But Sievers had two big advantages.
First, he’s been with the company almost 25 years. He knows it inside-out. Had the new CEO come from the outside, how would he get to know the team at a time when nobody can travel? Sievers said, “I know most people. It’s really good.”
Second, Sievers has been a member of NXP’s executive management team since 2009. He was one of the six to 15 people with a front-row seat for predecessor Rick Clemmer’s operation. “I remember the time I joined the team very well — it was three quarters before when NXP made an IPO in the summer of 2010.”
That’s when the education of Sievers began — turning an engineer with degrees in Physics and Information Technologies into the boss.
How it all began
It’s not unusual to find a European or Asian CEO who has spent his whole career in the company he now heads up.
After graduating from the University of Augsburg, Sievers worked very briefly at a solid-state physics research institute — which was a branch of academia. “In that sense, NXP is the first private company where I got a job.”
So, why did he want to work for Philips?
As Sievers tells the story today, he wasn’t even serious about job hunting. “I wasn’t under any pressure to find a job…I was just trying it out at Philips. I got fantastic feedback then, and they offered me a job in the components division. It was about capacitors, coils and that kind of stuff.”
Sievers acknowledges, “Everybody told me I was an idiot when I didn’t accept the job offer. I was this arrogant, physics person. I thought, who wants to deal with coils and capacitors? That’s boring.”
Philips in those days was “really a nicely managed horizontal company,” he said. Two weeks later, they came back to Sievers and offered him a job in the semiconductor division, as a product engineer for microcontrollers. “It was a programmable device and then it was moving to 16-bit architectures.”
Sievers said, “I had a very limited perspective, then. I thought the complexity of the product is what makes life interesting.” So he took the job. “But it wasn’t because I thought Phillips was a great company.”
The rest is the history. Following is an excerpt of EE Times’ conversation with Sievers this week.
Philips Semi 25 years ago and NXP today
Q: So, compared to the company you joined 25 years ago, what do you see as biggest transformations NXP has made?
“Well, first of all, I would say the company today, from what it used to be, is worlds apart. It’s a night and day difference.”
In Sievers’ mind, “focus” is the biggest transformation the company has made. “We know what we do, and we know also what we do not do. Because semiconductors offer such a broad array of opportunities every other day, the only way to win is to be very focused on where you really want to lead, where you really want to outperform others and out-innovate your competitors.”
The lack of focus was what Sievers thinks the biggest challenge faced by Phillips semiconductors in those days.
Second, the world has advanced at incredible speed. “I mean, 25 years sounds relatively short, but in a way, the pace of the business, the way this is all operating now, is just incredibly much faster.” Sievers added, “I didn’t get my first mobile phone until the end of the nineties. The whole way of conducting business on a global scale is very, very different.”
Third, technology advancements matter a lot more to society today. Sievers said, “In my opinion, from a technology perspective, what we do today and what we have in our hand now advance the world and make a difference to society, to consumers and to the world. This isn’t just about selling a product, but actually reducing Co2 emissions. Avoiding accidents, making, driving safer. It’s about all these things, which I think have a bigger and bolder impact on society.
Lessons learned from Rick Clemmer
Q: You saw how Clemmer worked, up close and personal, since 2009. What are the most important lessons you learned?
Sievers said, “Had you asked me what are defining elements in my career, certainly one of them is the leaders from whom I learned. The most influential is Rick Clemmer. That was a very big privilege.”
Focusing on business and investment in the market segments in which NXP is most likely to outperform others is the type of know-how Clemmer shared with Sievers.
“But I didn’t just learn these lessons as an abstract thing. I learned how to live it in practice — every single day — in a big company.”
He cites the concept of “relative market share.” Sievers explained, “It is about how to lead in a certain segment, by becoming not only number one, but actually being twice bigger than your next competitor. This propels you in a position to really outweigh all of your competitors.”
He added, “So that’s what focus means in practice. That’s one thing I learned.”
Another lesson Sievers learned from Clemmer is passion. “He incorporated in me the passion… passion for the company, the business, and the customer relations. He led us by example.”
Clemmer vs. Sievers
Q: Given your role as president of NXP since 2018, is it fair to assume it’s unlikely for you to launch sudden changes in NXP’s business strategy?
Sievers said, “Yes, the business model, the financial strategy, the financial model, the key portfolio elements… This is where I had the privilege to put my signature under Rick’s name. Rick has left me a lot of freedom. So no, this is not going to change. The business strategy you see now is mine.”
Sievers, however, added that he plans to “further evolve the company on what Rick has been building.”
He noted, “I would actually give you two elements. One is what I call innovation culture, which I will explain in a minute. The other one is the people aspect. I’m personally inspired by leading teams and by engaging teams.”
In his opinion, a company’s best competitive weapon is “the best, connected team.”
Of course, technology is important. Customer satisfaction is important. There are many important key performance indicators (KPIs), Sievers said. “But the most sustainable competitive weapon in our industry is the best-engaged team. And that comes back to the innovation culture.”
In the technology field where NXP competes, business is more complex than ever before.
“Nobody can do it alone. I’m absolutely convinced that it always needs a lot of people typically across borders, across even different professions. Physics people need to talk to software people, software people to hardware people… The company best positioned to connect all these brains in an engaged way will have the biggest competitive advantage. This is where we can propel NXP into another league. I think we are good, but we can become much better.”
Q: Given that Kurt Sievers is not Rick Clemmer, how do you compare yourself with Clemmer — in personality, temperament and management style?
“Well, probably I have more emphasis on ‘people focus.’ Also given my background, I also have a very natural attraction and passion for innovation. I’m just attracted by what technology can do.”
Q: How much revenue does NXP generate from the Chinese market these days? In 2012, NXP cited that share as 39 percent.
Sievers called the current revenue in China “significant,” but refrained from providing the exact number.
He explained that not all China revenue is generated in China. “A lot of shipping to China is actually generated in the United States or in Europe. China is only the location of where it’s being built. That’s why the number is a little bit misleading since a lot of it is then actually going back and forth. And sometimes we ship a product into China, it’s manufactured into a module and the module comes back to the United States and Europe, then assembled into the final product.”
Noting that China continues to be an important part of the market for NXP, he said, “The good news is that we are a European company.” He added, “In the midst of all the trade tensions, Chinese customers clearly appreciated the fact that we are a European company.”
Sievers explained that during the current U.S.-China trade tension, Chinese customers prefer to source from a Chinese supplier. Because Chinese competitors aren’t yet making many products NXP offers in China, the next option is to source it from Europe, given all the issues with the United States.” He concluded this gives NXP “actually a favorable position in the current environment relative to China.”
Q; Does this mean NXP is exempt from the tougher restrictions the U.S. government has placed on certain Chinese companies on “the entity list”?
Sievers said, “No, it’s not that black and white. Of course, we always have to comply with all of these export control regulations. And they change all the time. They come at a pace of once per week sometimes.”
Sievers said, “It always depends on where the IP is generated, and where manufacturing takes place. And in, in the light of that, we have a lot originating from Europe, manufactured in Europe or other places. So, it’s not black and white. But so far, we’ve been faring quite well in this environment.”
Q: So, when do you plan to go back to China on your business trip?
Sievers said, “I will tell you as soon as I can. Yes. And I say this with a smile and with a tear in my eye for the last ten weeks, when you and I have not traveled. I think it must be the first time in my last 25 years in a professional career that I’ve stayed so long at home. It’s nice for the family. This is all wonderful. But I feel it doesn’t really do justice to what the company needs. So clearly as soon as it is reasonably possible and in tune with all the different regulations, I will be on the road again. And that is both for customers, but certainly also for seeing our employees, my colleagues in the different sites worldwide.”