When the Chips are Down
January 1 1999 by Charles Darwent
There’s a story that Pasquale Pistorio, president and CEO of STMicroelectronics, relishes. In July 1980, Pistorio, then head of Motorola’s international semiconductor business, decided to take a job as CEO of Italian microelectronics outfit, SGS. “I went to my boss at Motorola and told him I was going back to
Well, maybe. A brief survey of Pistorio’s subsequent career suggests otherwise, however. Having turned around the ailing SGS”I just added my manufacturing and mass marketing experience to what was basically a lab,” claims the uncharacteristically self-effacing Italian Pistorio set about looking for a partner. In 1987, he found one: the French microelectronics business, Thomson Semiconducteurs. “Thomson and SGS were the same size and had many things in common,” says
As anyone who has followed the wranglings of the EC knows, acquiring scale is one thing; getting an Italian and a Frenchman to share a corporate culture is another. Pistorio’s answer was to transplant
How has Pistorio managed this? The answer has less to do with his talent for gluing things together than for taking them apart. The Italian’s Roman genes have left him with a taste for conquering through division. First, there is
“This means you cannot do all your manufacturing or all your product design in one country and sell in others,” explains Pistorio. “We have tried to build our global approach by being an integrated supplier in each major microeconomic system-
Pistorio’s goal is to build a “macro-corporation that behaves like a collection of microcorporations,” he asserts. “Ideally, I’d like to see
“Something like 62 percent of our sales are now in differentiated on-chip products,” says Pistorio. “It’s a different kind of business, because your customers are effectively your partners. You can only do that by getting close to them, not just to their purchasing departments but to their designers, their manufacturing activities. But you also get greater stability in margins, because you’re not competing with Samsung or Toshiba all the time. Our margins have been in the 38 percent to 38.7 percent range for eight successive quarters.”
The real point about Pistorio’s little-big beliefs, though, is that they make
President and Chief Executive
Family: Married, two daughters.
Education: Masters, electrical engineering, Polytechnic of Turin
Diplomatic Triumph: Persuading a group of competing European countries to pool their sub-micron silicon R&D funding.
Diplomatic Blunder: Underestimating the cost of living when taking a 50 percent salary cut on moving back to