INTC Intel Corporation

By Tatyana Shumsky 

Help wanted: A Silicon Valley finance chief to navigate uncharted waters in the semiconductor industry. Must be able to counteract plateauing sales and thinning margins while downsizing a global workforce.

Intel Corp. may have a tough time filling the CFO vacancy left by the promotion of Stacy Smith to an operational role last month. The company needs someone with experience pivoting product portfolios, reducing head count and cutting costs after years of fast-paced growth.

Intel isn't alone. Chip makers Marvell Technology Group Ltd. and Qorvo Inc. also are looking for new CFOs.

"It's difficult to find people qualified to do that role," said Deepon Nag, analyst with Macquarie Group. "The semiconductor industry is a very complex industry...and it requires someone who is familiar with all these parts."

The shift in job requirements coincides with personnel volatility. About one-third of semiconductor companies changed CFOs in the last 12 months, according to executive recruiter Korn/Ferry International. That is twice the rate for the largest 1,000 public and private U.S. companies that Korn/Ferry tracks, resulting in shorter tenures -- four years, compared with 5.3 years for the recruiter's broader index of companies.

The person taking over Mr. Smith's role will have to reduce Intel's reliance on personal computing, slash head count by 12,000, or 11%, and deliver annual savings of $1.4 billion by mid-2017. The person also must advance Intel's cloud-computing efforts, extend chip usage in Internet-connected devices and expand the company's memory chip business.

"The CFO role at Intel is a challenging job...Intel's next CFO, whether from inside or outside the company, will inherit a world-class team and a company that is growing and financially strong," Mr. Smith said in an emailed statement.

While Intel may welcome an external hire, the next CFO is likely to come from within the semiconductor sector. Boards and executives tend to want someone who understands the risks associated with the industry, recruiters say.

"The more knowledge you have in all of the senior management roles about the likely future of the sector, the better off you are," said Bruce Kimble, a principal at executive recruiting firm Heidrick & Struggles who focuses on the industry. "All of our boards and CEOs are looking for people with that depth, because it just helps to be part of the senior decision-making."

CFOs appointed in the past year at Linear Technology Corp. and Xilinx Inc. were internal hires.

Don Zerio joined Linear as controller in 2003, becoming CFO last year. Even though he had more than a decade of experience at the company, additional "study" was needed, he said, because the CFO role called for greater involvement in crafting the company's growth strategy.

"I need to be a financial partner with the rest of the management team to help them grow the business," he said. "I don't think at Linear, you were looking for the CFO to help grow the business, you were looking for the CFO to help squeeze more profit out of those sales."

Xilinx, Marvell and Qorvo didn't respond to requests for comment.

Still, industry CFOs in the throes of reallocating capital from flagging business lines and evaluating acquisition opportunities face a long slog. It can take years for billion-dollar investments in new technologies to reach the market.

"There's not much that we can do quarter to quarter to influence our sales. The things that we do take many years," Mr. Zerio said.

Dan Durn, CFO of NXP Semiconductors was finance chief at Freescale Semiconductor, which merged with NXP last year. He likened his role to defending a quarterback -- or in this case, the chief executive -- "making sure everybody is in their positions and executing the play that was called."

In practice, Mr. Durn analyzes NXP's spending to ensure it advances the company's pursuit of leading positions in various kinds of technology, such as providing chips for near-field communication and encryption, he said.

Overall, CFO vacancies at semiconductor companies are likely to need people who can lead transformational change, given the current dynamics of the sector.

That's what drew Colette Kress to Nvidia Corp. in 2013. The CFO role appealed to her because it required someone to drive the company's transformation from a seller of individual hardware to a provider of a broad base of networks and services.

"The best thing I could tell any type of CFO coming in: Be careful how much time you spend thinking about the trends that you've seen in the past and have a good understanding of how quickly things could move going forward."

Write to Tatyana Shumsky at tatyana.shumsky@wsj.com

(END) Dow Jones Newswires

May 09, 2016 18:43 ET (22:43 GMT)

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