Hector de Jesus Ruiz, the new chief executive of Advanced Micro Devices Inc., calls it the perfect storm.
Demand for AMD's chips is woeful. Semiconductors are in oversupply. The world economy is in a slump. And the threat of terrorism and political instability abroad are sapping what little confidence U.S. consumers have left.
It's a grim situation but hardly the first to face the 56-year-old engineer.
As a boy from Piedras Negras, Mexico, Ruiz cleaned houses in exchange for English lessons so he could attend high school in Eagle Pass, Texas. He was the class valedictorian, went on to study at the University of Texas at Austin and earned a doctorate in electrical engineering at Rice University.
When he met Jerry Sanders, AMD's flamboyant founder and chairman, Ruiz was president of Motorola Inc.'s semiconductors division. Sanders persuaded Ruiz to work for AMD and succeed him as CEO.
Sanders and Ruiz are an odd couple. Sanders is outgoing, boastful and charismatic. Ruiz is quietly methodical and uncomfortable talking about himself.
If Sanders hadn't founded AMD, he has said, he'd be an actor. Ruiz confesses that if he weren't CEO, he'd be a football coach. A sports fanatic, Ruiz roots for the Houston Texans, a brand-new (read: underdog) National Football League team that won its first game last week--against the Dallas Cowboys.
It's a fitting analogy for AMD's position as the outgunned No. 2 chip company, behind Intel Corp.
Question: If you can't outspend Intel, how will you compete with them?
Answer: It's easy. We can outsmart them.
Q: OK. How about some examples?
A: I think Intel is an awesome competitor. They're good, strong, well managed. Which makes it harder for us. We have to do things differently and with less people, less capital.
This requires us to partner with people, build what we call deep-rooted partnerships. For example, we work with Fujitsu in making flash memory chips. That relationship started 10 years ago. That has been good. But going forward, it has to be much deeper. It will become obvious in the months ahead that this partnership will include development of ideas and products.
For example, to succeed in microprocessors, you need the chipsets [the larger piece of silicon on which the central processing unit sits]. We don't make chipsets. The thing we're changing going forward is finding a smaller number of participants to jointly develop the microprocessor architecture so the chips and the chipset work better together. Every time I sell a processor, it will have been designed with our partners. Their success will be totally centered around our mutual work.
Q: What about innovation? Intel has thousands of engineers thinking about the future of processors. You have about 150 in your process engineering lab.
A: We think we're more focused. Our efforts are strongly focused on microprocessors and flash memory. We have some bright people innovating solely on those two product families. In 2001 and 2000, we had over 1,000 patents issued through AMD, which is a significantly larger number than our competitor considering that we're significantly smaller. We only do a few things, but we try to do them well.
Q: What's your strategy for AMD, and how will it be different from what Jerry Sanders has done?
A: There are several levels to this. First, let's look at personalities. Jerry's a very strong, charismatic leader. He founded the company. It's centered around him. AMD and Jerry Sanders are synonymous. But we are now a $3-billion company. We have to scale that up. We'd like to be a $10-billion company. To scale, we need a cadre of executives. My near-term goal is to ensure that AMD is represented by a team of strong representatives, as opposed to just one strong charismatic leader.
Secondly, look at the partnerships we have. We've never been large enough to do everything ourselves. We need to evolve our partnerships, take them into a much deeper mode.
Lastly, in terms of manufacturing technology, Jerry's been quoted saying that real men own their own fabs [manufacturing plants]. Well, what we now see is a different scenario. AMD will have to partner with people who view manufacturing as their core competency. Our core competency is core processor design. Going forward, I'm modifying the model to avoid spending as much capital as we had in the past.
Q: How would you say you're different from Jerry as a manager?
A: Those who know me know it's difficult for me to talk about myself. I find it really awkward. I can tell you what I would hope people who work for me see, and that is a very strong desire in me to build a team. If I couldn't be CEO of AMD, my dream's to be the coach of a football team and win some games.
Q: How are your new Athlon chips or Hammer chips different from any other AMD product?