Microchip maker's CEO, Warren East, attempts to allay concerns about the company's long-term viability without him at the helm.
Warren East, CEO of ARM Holdings, the U.K's strongest tech company, announced Tuesday he will retire in July. The news spooked the London stock market and led to worries over the long-term future of the Cambridge-based manufacturer.
The microchip designer has quietly built an enviable place as a supplier of intellectual property to many hardware makers, especially for the latest generations of smartphones and tablets.
East, who joined the 2,300-strong firm in 1994, will step aside after 12 years at the helm of ARM. He will be succeeded in that position by the company's current president, Simon Segars.
The company says the change will not be disruptive, with East claiming in the announcement that, "It has been a privilege to lead ARM during such a momentous and exciting time for our industry and I am proud of what the ARM team of employees and partners has achieved together while I have been CEO ... We take a very long-term view about our business, and we believe that now is the right time to bring in new leadership, to execute on the next phase of growth and to plan even further into the future."
However, the unexpected move led to a 2.6% drop in the company's share price in the London market on the day. This poor reaction was likely the prompt for East appearing on the BBC's flagship radio news program Today on Friday to explain his decision.
The departing executive told listeners that he was stepping down because he didn't want to be onboard for the length of time it takes to move the firm through a new design cycle. "From a blank piece of paper to things you can buy in a shop, that's a six-year process," he said. "That would mean decisions I take now would have to be seen through to 2020, and by then that would make for too long a time in the job. Twelve years is stability. Twenty years as CEO is too long to be helpful to the company."
East went on to try and placate stockholder fears about the long-term viability of his company. When asked if ARM could be "picked off by a U.S. rival," he declared, "We are a British-headquartered company, yes, and I am very proud of that fact, but the point is we are now a global company with a very broad ecosystem around us. We have relationships with 320 semiconductor companies, a thousand other technology companies; it's in no one's interest for us to stop providing to a very broad market."
East claimed nine billion chips based on ARM designs had been shipped in devices "from smartphones to supercomputers" last year alone, for example.
It's not clear if his radio appearance was enough to calm nerves, and not everyone might be convinced by his answer to a question about what the government should do if ARM was approached by a foreign buyer, given its prestigious place in the British high-tech industry: "We are a public company, so would have to listen to an approach. But if that did happen, I do hope the government would look to try and keep this great asset in the U.K., yes."
. We've got a management crisis right now, and we've also got an engagement crisis. Could the two be linked? Tune in for the next installment of IT Life Radio, Wednesday May 20th at 3PM ET to find out.