Sakamoto Presents Innovations in Management

It’s not every day that a CEO decides to cut his salary in half until the company returns to profitability, but that is exactly what Yukio Sakamoto, president, representative director and CEO of Elpida Memory (Tokyo), did recently in response to conditions in the DRAM market.

Laura Peters, Editor-in-Chief -- Semiconductor International, 7/16/2008 10:00:00 AM

It’s not every day that a CEO decides to cut his salary in half until the company returns to profitability, but that is exactly what Yukio Sakamoto, president, representative director and CEO of Elpida Memory (Tokyo), did recently in response to conditions in the DRAM market. Sakamoto outlined his fairly unique approach to managing an organization at a keynote address yesterday titled, “Challenges in the DRAM Business.” He became CEO of Elpida in November 2002 and implemented key changes. One was to switch the company’s product focus from a “me too” to differentiated products in the low-power, low-leakage arena. Rather than investing heavily in an R&D center, capital is focused on the production line. Also, the mass market is not targeted, but rather niche markets with high growth potential. “I took us from six fabs to one, and even today we only have three fabs between Elpida and our partners Qimonda and Powerchip,” Sakamoto said, joking that “we sent the useless management back to the parent company.”

Yukio Sakamoto, President, CEO and Representative Director, Elpida Memory

To adapt to industry needs, Sakamoto indicated that chip manufacturers need to explore alternative business models. “In the case of semiconductors, we sell only individual components — that will bring us serious problems in the future.” He suggested a move from specialized companies to system solution companies or partners. “We have to find “cash cows — like printers, games or mobile phones. The replacement demand for inexpensive daily consumables also exists.” Reflecting on the fact that no one company can make all components for electronic systems (memory, logic, mixed-signal, etc.), he indicated that partnerships are key to shifting from semiconductor to end system to application suppliers. Elpida’s partnerships includes a strong R&D arm in Qimonda (Munich, Germany), a strong manufacturing base at Elpida, and a strong short-term end-application arm through its partnership with Powerchip Semiconductor Corp. called Rexchip Electronics Corp. (Central Taiwan Science Park, Taiwan). Elpida also has a joint venture with UMC (Hsinchu, Taiwan), where it has gained access to copper and low-k technology, as well as high-performance transistors. Elpida brought to the table embedded DRAM and phase-change RAM (PRAM) device process technology. The company is currently producing products with 90 nm down to 50 nm design rules.

Sakamoto presented revealing statistics on the revenues and operating profit of commodity-based companies, specialized companies and Japanese companies from the early 1990s to 2007. Revenues and profits were enjoyed more by commodity-based firms early on, but there was a significant, dominant trend toward specialty chipmaking through to today. Japanese companies have lost market share over this term.

Within Elpida, some of Sakamoto’s tenants include the conclusion of all meetings within one hour, in-house reports must fit on a single page of paper, responses to emails and other inquiries within 24 hours (ideally 1-2), all executives and employees fly economy class for domestic and business class for flights over six hours, and employees should not be addressed by their titles. Relative to other corporations that typically spend 50% of their time concentrating on customer visits, alliance and pure working time, Elpida dedicates 85% of its time to these core activities, limiting internal meetings and productive time to <15%.

Elpida’s Hiroshima plant currently produces mostly DRAMs, but will be performing more foundry operations in the future. Sakamoto showed a photo of a 20-chip stacked memory device connected with through-silicon vias (TSVs). He expects this technology to be in production by 2010.

Reflecting on the current worldwide economy, Sakamoto said that the answer to lowering oil prices can be found in alternative energies, such as wind, solar and nuclear, as well as the development of electric cars and the use of less power in electronic systems, including PCs and TVs.