The Bane of Sarbanes-Oxley

 Dan Hutcheson
The Bane of Sarbanes-Oxley:The good news for me is that my prediction from when Sarbox was enacted that it would be a disaster is not only coming true, but it is being brought to the forefront of national consciousness by the very business publications that hailed its enactment when I was predicting disaster (Gee it’s so much fun to toot your own horn, but then why have a horn if you can’t toot it?).
The bad news is that America is in the very real midst of losing its dominance in chip technology directly because of Sarbox.
A good example of this is playing out with cell phones and DSP. Because of Sarbox, Texas Instruments could not inform their best customers that they were about to move R&D to Asian foundries. Those customers are rightly steamed for at least four reasons: 1) This is no way to treat a partner; 2) They don’t want their IP farmed out to Asia; 3) It cost them stock market valuation; and 4) If TI’s going fabless, why do they need them? They can go directly to the foundries themselves. Of course, none of these issues are ones that shouldn’t have been addressed up front before the decisions had to be made. The problem is that Sarbox essentially makes it illegal to talk openly with customers about issues that could materially affect your stock, even though it may materially affect their stock and business as well. That doesn’t even factor when conditions go the other way. What customer is going to tell a vendor in advance of something that could drastically affect them if it is illegal? The result is a chilling of business relationships with American public companies -- a chilling that has put them at a competitive disadvantage.
By the way, it also shows how important semiconductor R&D capability is viewed by electronics companies. With all your IP embedded in chips and your ability to deliver future product generations dependent of what comes out of R&D, you can understand why it’s become so important. It’s also an important reason why IDMs have pulled process integration back into their own companies, reversing the trend in the nineties to farm it out to equipment suppliers. It’s also why you see smart Chip Makers marketing their R&D capability. In fact, it is safe to say that at some companies, R&D has become a vital part of the marketing budget. So it you’d like to bolster your market position, there’s a bunch of hot R&D bodies down in Dallas available for hire.
Conclusion: It shows how important semiconductor R&D capability is viewed by electronics companies.
Views: 2645
Domain: Electronics
Category: Semiconductors

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