Cypress Semiconductor CEO: Consolidation In The Semiconductor Industry Is Driven By Costs

With 10 big mergers having taken place in the last 2 years, there's no industry excpt perhaps healthcare that's consolidating at a pace of the semiconductor industry. While some see it as a sign of the industry maturing, others perceive it as the only resort for semiconductor companies to keep growing.

Cypress Semiconductor Corporation CY  CEO, Thurman J. Rodgers, was on Fox Business News recently to discuss the consolidation happening in the industry.

Costs Driving Consolidation

"There is a consolidation going on, it's driven by costs," Rodgers began. "It's interesting I came in this morning and my screen was all red and I have been running the company now for 32 years, so, I have seen red screen days and green screen days off and on."

The Nuclear War Analogy

He continued, "One thing about the chip industry is that, if you analogize to a nuclear war, every time there's a nuclear war we are the furry little mammals that crawl into the ground and go underground and wait for the thing to happen and then we crawl back up and take over the earth."

Chips = Crude Oil

"Everybody is got to have chips, the new name of the game is the chips are got to be cheaper and more efficient, that's called consolidation today. We just put together $2 billion company (Spansion acquisition), we are taking $160 million out of costs just because of the synergy. And we are on the wave where Jerry Sanders --my old boss from AMD --called chips the crude oil [of our economy] to crude oil of electronics and that's what we do.