May 13, 2022

Tensions between leaders at the semiconductor specialist Soitec

It is the conflict of a business that is doing well. More than good even. Power is more rarely an object of covetousness in a dying society. This is what should first reassure in Isère, concerning Soitec, which employs 1,700 employees and which is one of the pillars of the “Silicon Valley of Grenoble”. The company has good results and excellent prospects. It even builds new buildings on its Bernini site. Still, the ongoing conflict between the Board of Directors and the Executive Committee is damaging, and is a task.

A process of appointing the new director general which is debating

You have to imagine that the executive committee is to the board of directors, what a captain/playmaker is to the coach of a football team. One thinks up the strategy, but it’s the other who applies it in the field and guides the team. One can hardly have a result without the other and vice versa. The Chairman of the Board of Directors of Soitec today is Eric Meurice. The managing director, perhaps better known to the general public, is Paul Boudre. On January 19, Soitec’s board of directors announced that a change of captain would take place next July, and gave the name of the successor: Pierre Barnabé, 51, currently responsible for the big data and security branch of Atos. It’s a very, very big company: the new CEO isn’t just anyone and doesn’t come from just anywhere. But it doesn’t come from semiconductors, or from Soitec, and that’s perhaps one of the first things that gets stuck.

Paul Boudre, CEO of Soitec since 2015, is coming to the end of his second term © Radio France
Laurent Gallien

A united comex behind Paul Boudre

In any case, as soon as the choice of the board of directors was announced, the executive committee made its opposition known. In fairly clear words internally. He criticizes Eric Meurice for having played him “solo”, leaving aside the comex and his current general manager. Since then, a joint press release has calmed things down – in particular to reassure shareholders, after the share price fell by almost 25% in 5 days – but behind the walls of Soitec, the debate is still there.
It is also necessary, to grasp all the dimensions of the conflict, to make a small “historical” reminder. Never until now has a CEO of Soitec been appointed “externally”. Paul Boudre, in the company since 2007, was propelled in 2015 to the management of a company on the edge of the abyss. With a close-knit executive committee behind him, he managed to do more than raise the bar. Today’s Soitec is therefore largely him, and them. Who can take a dim view, despite the official homage of the board of directors and an approaching age limit for Paul Boudre, that none of them, or them, is consulted or perhaps above all …chosen.

New challenges, new governance?

For its part, the Board of Directors replies that the entire process of choosing the future CEO was carried out under normal conditions and in accordance with company rules. In the debate, this body finds support on the side of the CGT. The union, which has deplored for some years a management exercised from Singapore by Paul Boudre, also believes that changing bosses and “opening up” the head of the company a little is rather a good thing at a time when Soitec no longer has to focus on the smartphone market – in which Paul Boudre has significant networks – to go in particular to the power electronics market. It is she who will in the future manage and improve the ratio consumption/power supplied by electric motors and therefore become a pillar of the automotive industry.

What way out of the crisis?

The crisis being there, it is now a question of finding the means to get out of it. As quickly as possible so as not, beyond finances, to risk burdening the very activity of the company due to the paralysis of the decision-making bodies. With several questions? Will Pierre Barnabé be the future CEO of Soitec? If so, how is he going to pull behind him a partially or totally hostile comex? All this is no doubt at the heart of current negotiations, under the watchful eye, we cannot imagine otherwise, of a state shareholder through BPI France and CEA Investissements. Soitec is of strategic importance in terms of semiconductors for France and Europe. As such, it has enjoyed significant exposure in recent months, which makes a “dressing room” conflict all the more visible, which is never good publicity.