Focus Freescale

Freescale is to focus its activities in 2013, CEO Gregg Lowe tells Reuters.

‘Focus’ is the current industry euphemisim for exiting markets where a company is no longer competitive and concentrating on the areas where it can still make a profit.

NXP and STMicroelectronics are other companies where CEOs have talked about ‘focussing.’

Lowe says he does not expect to see results from the focussing until 2015.

Freescale sacked about 5% of its people this year.

The company is still trying to service and pay down the $9.6bn debt imposed on it when private equity company Blackstone bought the company at a valuation of $17.6bn in 2006.

The debt has now been reduced to $6.5bn but many believe that Freescale can never repay it.

Freescale hasn’t grown since the 2006 acquisition and has been chronically loss-making. In that time it has sunk from a top ten industry position to No.16.

Being focussed on paying down debt, instead of investing the money in developing new products, semiconductor companies are hobbled in their ability to grow.

The semiconductor industry has always hoarded its cash in good times to invest the money in new products to get it out of the next recession – when that recession inevitably comes.

Asked by EW if the record showed that the private equity industry model was not suitable for the semiconductor industry, Lowe replied that private equity gave the company the opportunity to focus.