(Bloomberg) -- Lisa Su spent her first six years at the helm of Advanced Micro Devices Inc. turning around the troubled chipmaker. She slashed debt and oversaw products that launched on time and performed as advertised.Now she’s going beyond cleanup to challenge Intel Corp. for the lead in computer chips.The 51-year-old engineer -- among the few female CEOs in technology -- unveiled a $35 billion all-stock acquisition of Xilinx Inc. on Tuesday, one of the largest chip deals ever. In interviews and conference calls, Su made it clear there are few limits to her ambition.“We have an even bigger place in the industry over the next five years than we’ve had in the last five,” she said.Since taking over in 2014, Su has erased AMD’s reputation as an accident-prone supplier of cheap processors struggling to survive in Intel’s shadow -- something her predecessors failed to do spectacularly.Buying Xilinx, a maker of programmable silicon, will take AMD into new areas such as automotive and communications networking, while bolstering its offerings in the lucrative market for cloud data center components. If the transaction closes next year as planned, the company’s annual research-and-development budget will jump to more than $2.7 billion. That’s still small compared with Intel’s but it’s a crucial ingredient if AMD is going to seriously challenge the industry’s leaders.Born in Taiwan, Su graduated from the Bronx High School of Science in New York and got her Ph.D. from the Massachusetts Institute of Technology. She worked at companies including Texas Instruments Inc. and International Business Machines Corp., then arrived at AMD in 2012 as a senior vice president.An early success was getting AMD chips in the dominant gaming consoles, Microsoft Corp.’s Xbox One and Sony Corp.’s PlayStation. But most of her progress has come from a methodical focus on meeting customer demands -- a stark contrast to former AMD CEOs who were known for splashy product launches that often didn’t deliver.While she’s been involved in chip industry innovation, Su dislikes portrayals of her as a lab-bound technical genius, describing herself as an OK engineer. She says one of her main skills is the ability to understand engineers and help them make the best high-level decisions, not do the work for them.In her usual practical fashion, she presented the Xilinx deal to investors as a transaction that will improve AMD’s finances first and then transition the combined company to future technical leadership.“I haven’t talked a lot about M&A because I didn’t think there was a need to do M&A for M&A’s sake,” she said. “This is about what’s the next step for AMD and Xilinx is the best franchise in the industry.”The structure of the Xilinx transaction also shows the power of Su’s transformation. AMD shares have soared under her watch and the company is using that currency to pay for the acquisition. That will help Su avoid the heavy debt load that crippled AMD a decade ago.Read more: AMD Tries to Avoid Past Debt-Ridden Deal MistakesThe chip industry’s first female chief executive now wants her company to be more than just another supplier of components. She sees Xilinx helping AMD set the industry’s agenda by defining new technology, something that’s mostly been the preserve of Intel in computing for half a century.Getting to this position hasn’t been easy. When Su took the top job, she was AMD’s fourth CEO in a decade. The company had lost money in six of those 10 years as products either launched late, performed below expectations or had to be fixed later. That left AMD with less than 1% of the lucrative server chip market, down from a peak of 26%.Prior to the Xilinx deal, Su’s most public expression of ambition was to regain that 26% market share. When discussing AMD’s future, she would fall back on her standard refrain of “consistent execution” -- creating a company that delivers what it promises.One of her biggest decisions in 2018 has helped Su keep her promises and set the stage for AMD’s next chapter. The company outsourced production of its best chips to Taiwan Semiconductor Manufacturing Co. Soon after, TSMC overtook Intel in production technology. Now AMD’s processors are often as capable as Intel’s -- sometimes better. When she announced the Xilinx agreement, Su was careful to point out that her acquisition target also relies on TSMC’s production prowess.Read the Bloomberg 50 profile: Lisa Su, AMD’s David to Intel’s GoliathIntel still dwarfs AMD. The world’s largest chipmaker has an annual R&D budget of more than $10 billion and is expected to make a profit of $21 billion this year -- more than double AMD’s revenue.But Intel is making Su’s job easier. The company is going through an unprecedented series of stumbles with its once peerless manufacturing. It’s only just started shipping large numbers of chips made with a production technique called 10 nanometer, more than three years late. AMD and its customers are already enjoying the benefits -- price, performance and power efficiency -- of a more advanced type of manufacturing known as 7 nanometer.That type of technical leadership helped persuade Xilinx Chief Executive Officer Victor Peng to join Su.“We had a great path as a standalone company,” said Peng, who will become AMD president and continue to run the Xilinx business. “We looked at the landscape and we thought about this carefully. This is about choosing to be part of an even greater company -- which is AMD.”(Updates with photo of CEO after fourth paragraph and link to Businessweek profile.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Lumentum (NASDAQ: LITE) and Texas Instruments (NASDAQ: TXN) are both major supply chain players in the tech sector. Lumentum produces optical chips and lasers, and TI sells chips to automotive, industrial, consumer electronics, and communication infrastructure companies. Both companies have suffered disruptions during the COVID-19 crisis, but their stocks stayed resilient: Over the past 12 months, Lumentum's stock has risen nearly 50% as TI's stock advanced more than 20%.
(Bloomberg Opinion) -- Earlier this year, as the pandemic wreaked havoc on the economy, Facebook Inc., Alphabet Inc.’s Google and other big players in digital-advertising were bracing for a prolonged slump in the industry. It’s clear now that many of their worst fears haven’t come to pass. Marketers began spending again after governments relaxed lockdown orders and economies stabilized. But with elevated valuations already baking in expectations for a rebound and a surge in Covid-19 cases now threatening to stunt the recovery, investors might want to take a moment to stop and assess. We will get a clearer picture of the online ad market’s condition later this week when Facebook, Alphabet and Twitter Inc. report results after the close of trading on Thursday. But let’s look at what we’ve learned so far from other companies this earnings season.Anecdotal evidence from earnings calls points to an improved economic environment, at least until lately. Verizon Communications Inc. CEO Hans Vestberg said last week he saw high levels of business activity among the wireless carrier’s large corporate customers. In addition, two major semiconductor suppliers — Texas Instruments Inc. and Xilinx Inc. — cited stronger-than-expected demand from the auto sector in their calls with investors. This all bodes well for ad spending, assuming the brighter outlook is sustained. Snap Inc.’s blockbuster earnings last week provided perhaps the strongest evidence of a rebound. The social media company beat the consensus sales estimate for its September quarter by more than 20%, with management saying many of the headwinds they expected didn’t materialize. Corporate advertisers surprisingly resumed brand-oriented marketing initiatives, a very positive sign. But Snap’s impressive performance also reflects the success of unique advertising products that have helped set it apart from its peers. These include new ad formats that can directly lead users to online sales and app downloads, as well as augmented-reality offerings that enable users to virtually try out products inside the Snapchat app. Larger rivals haven’t been able to match this type of innovation and likely won’t turn in the same kind of outperformance, even if they exceed expectations. Out of Big Tech, Facebook has done the best in expanding its offerings into the right areas. Recently, the social media giant has been aggressively moving into the e-commerce space. In May, the company signed a partnership with Shopify Inc. to expand its Facebook Shops initiative, enabling small businesses to easily create online stores on both Facebook and Instagram. Last week, it also announced plans to charge for new commerce-related services for businesses inside WhatsApp. This is a big deal because it represents Facebook’s first concrete step to monetize this messaging platform, which has more than two billion users. With consumer shopping behavior permanently shifting online, these moves should pay off.Google and Twitter have been less innovative, and it may show in their results. A healthier advertising market will help Google’s search ad revenue and Twitter’s more brand-oriented ads, but the two companies haven’t offered anything dramatically new or different that could spur another leg higher on growth. In some ways, Google’s search dominance may have left it with fewer additional areas to conquer. And I’ve repeatedly written about Twitter’s lackluster track record in keeping up and matching the competition’s latest ad platform technologies and features. Despite Twitter’s stock recent rise, I have seen nothing to change that assessment.Where does this leave investors heading into earnings? The news may well be positive — the ad business does seem to have held up better than expected — but the industry’s higher valuations depend on continued business momentum. New Covid-19 outbreaks, unknowns surrounding the presidential election and a lack of fresh fiscal stimulus all cloud the view, not to mention a toughening regulatory landscape. Even with its strong results, Snap declined to give official fourth-quarter guidance, citing the uncertainty over the holiday season and the continuing pandemic. If business trends do worsen, it may be a larger issue for Google and Twitter. Facebook and Snap should be more insulated, with their latest services and tools allowing them to keep riding the tailwind of e-commerce. Either way, the big wins may be harder and harder to score.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron's, following an earlier career as an equity analyst.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.