Micrel founder and former CEO Ray Zinn is numerous in unprecedented semiconductor industry and the whole trend and one of those who feel unhappy; Micrel in August 2015 for $839 million buyout by Microchip, but complain about Microchip Zinn CEO Steve Sanghi did not fulfill his thought has in some oral promises of reaching an agreement between two people.

Micrel founder and former CEO Ray Zinn is numerous in unprecedented semiconductor industry consolidation trend under one of those who feel unhappy; Micrel in August 2015 for $839 million buyout by Microchip.

Zinn is see EE Times in the previous article about Microchip after the acquisition of Atmel for severance pay employees into conflict with the latter (reference) take the initiative to contact our after the news broke, said he thought he has a gentleman's agreement between Steve Sanghi, CEO of Microchip was Sanghi said to him, he has a great company, after the acquisition of layoffs will be very mild and the two companies will be equal, but the result is not like that.

"When he visited the company, very warm and admiring, said I did a great job, have to his credit, excellent staff;" Zinn said: "when I try to negotiate with him to lay off, he who I promise him and I worry about the matter in accordance with the samples, and if he was cut by I a person here, where he will lay off a person." But Zinn also pointed out that: "when I asked him if he can provide a written guarantee, he said there cannot be archived record, but you can oral promise."

"After the completion of a deal, but he change attitude to one hundred and eighty degrees, said my company is very terrible, is he seen the worst of the employees, and I don't think he has cut his side any one person," Zinn said: "when I talk to him about the matter, he later is to write a letter to let a person afflictive... said some very you're welcome."

Zinn, said he believes the company is lean and have the profit, whole and should be competent in the class, so to understand himself and members of the board of directors will be left; But he does not expect Sanghi will close the Micrel fabs, and laid off many people ─ ─ it's really too he surprised: "he did a lot of verbal promises but not implemented, because I didn't ask him to write down in black and white; and no item by item, he didn't even need to obey."

"I didn't even want to evaluate this man, because his attitude is really very good ─ ─ it's my shame;" Zinn, said his company in 37 years almost annual profit, but Sanghi may don't care, only to see a loss of $50000 a year. According to the information from the company's former employees, only Micrel Zinn guess the number of layoffs Microchip half of layoffs, and if the original of Micrel wafer plant shut down, there will be hundreds of people being laid off.

Zinn points out, is located in the silicon valley of Micrel's 6 inch fabs, the BCD (bipolar CMOS DMOS) process, capacity utilization rate by about 35%, its inventory levels than trade is really low, but the equipment already all amortization, the factory and at the same time play the role of r&d and manufacturing: "so you can't let it full capacity;" He said the fabs is responsible for 85% of Micrel products.

"We may be in a few years will increase capacity utilization to 50 ~ 55%, but I'm afraid I never back to the 80 ~ 90%;" Zinn said that customers seek lower prices while foundries to Asia, to run a fabs in silicon valley is not easy, because of the high cost for the world's highest, but Micrel fabs remain competitive, more than 50% gross margin.

Sanghi plea...

But in view of the above from Micrel former executive, Sanghi have completely different, he said in an interview with EE Times, Zinn just want a company going downhill after trading the save face, and he said he didn't make any verbal commitment.

Sanghi, said poor Micrel operations, only 6% of the profit margin (operating profit), but did not increase revenue decade, present continuous decline over the past four years; The Microchip margin was 30%. And he points out, in February 2015 Microchip with Micrel started talks to buy, the latter expected the annual revenue of $265 million, but the deal completed in August, estimates and fell to $230 million, forces Microchip to assess the transaction amount.

And Sanghi, said the activist investors bought a 12% stake and Micrel requires exchange, the Microchip can only crustily skin of head to accept: "the company has performed poorly for a long time, we make it very hard, in that quarter ended December will raise profit margin to 18%, the future will further increase to 30%."

Sanghi also points out that in the Microchip acquisition at the time, Micrel has 689 employees, is only slightly less than 600 people now, later this year fabs turned off uncertain number will there be layoffs: "we retain the best people... layoffs is fair." And he stressed that Micrel activist investors and almost all of the employees, a long time ago that fabs should be closed, but is Zinn would you want to be the high cost of the factory; The fabs only 30% of capacity utilization, management and cost benefits.

Microchip in August last year announced that it would turn Micrel wafer plant production in alex in Arizona and Oregon 8 "fabs, some Micrel wafer factory employees will move to the stronghold; But Sanghi declined to provide the actual number of employees, "called silicon valley really hard to silicon valley, the cost is too high." Sanghi, said he was called a Glass feel website, for more than 80% of employees "satisfaction" evaluation, but Zinn get satisfaction evaluation when served as CEO of Micrel is only 50%.

But not for Zinn Microchip has been shopping spree since 2010, bought the unprecedented amount of company, part of the reason just for the sake of lift revenue growth Numbers; He notes that the position of the Microchip products enterprises engaged in revenue growth (organic growth) and is not very good, so we need through the acquisition of companies to extend: "to some degree you will hit the wall, unable to continue to buy a company, because of the debt ratio is too high, then still have to depend on enterprises growth."

This Sanghi, said over the past six years of annual growth rate of 8.3%, the term "Microchip and whole (including from the acquisition of the company's products) annual growth rate of 17.3%; In contrast, Micrel, the company's growth rate is 0% in six years.

"The enterprise will be stronger corporate acquisition, reorganization, in order to achieve higher profitability ─ ─ this is business;" Sanghi, said: "if we don't make investors happy, fate is like Zinn business."

And he points out, we are going, like Mr Anwar high (Avago; at: has acquired Broadcom), intelligence pu (NXP; at: has acquired Freescale) and so on enterprise merger results, is expected to bring hundreds of millions of dollars in cost savings, so layoffs are inevitable: "a broken enterprise can't have the strength of the prosperity."

The good news is that "some Micrel employee performance is very good;" Sanghi, said: "many underperforming businesses because of long-term blood loss to be fair to employees, customers or investors." And he thinks that Micrel bring lesson is that if you have to promise specific redundancy scheme: "that should be documented and obtain the approval of the board of directors;" The lack of this ritual is Micrel former CEO have to swallow the bitter fruit of myself.