Philips Breaks Out Semi Biz

Online staff -- Electronic News, 12/15/2005

With the aim of bringing increased flexibility to its semiconductor business to invest and grow while continuing to leverage the strengths of the company, Royal Philips Electronics said today it is creating a separate legal structure for its semiconductor business, in order to pursue strategic options that strengthen the group’s longer-term performance of these activities.

This move harkens back to Philips’ introduction of a business renewal program, announced early this year to improve the semiconductor division’s competitiveness and bring profitability through the cycle to between 5 and 15 percent, as well as to increase market share in the semiconductors division’s four core businesses of mobile and personal, home, automotive and identification, and multi market semiconductors.

“While we are pleased with the progress of the business renewal program, we see opportunities to further strengthen the activities and maximize shareholder value, with the step we announced today, in an industry where scale matters,” Gerard Kleisterlee, president and CEO of the Amsterdam, Netherlands-based company, in a statement.

Also, Philips’ supervisory board said it will propose the appointment of the current heads of its product divisions to be added to the board of management during its general meeting of shareholders to take place on March 30, 2006.

Philips’ five product divisions are headed by Jouko Karvinen, CEO of Philips Medical Systems; Andrea Ragnetti, CEO of Philips Domestic Appliances and Personal Care and chief marketing officer of Royal Philips Electronics; Rudy Provoost, CEO of Philips Consumer Electronics; Theo van Deursen, CEO of Philips Lighting and Frans van Houten, CEO of Philips Semiconductors.

 “The current board members and I believe it’s important we extend our circle to include the heads of the company’s five product divisions, as these colleagues play a crucial role in driving profitable growth at Philips,” Kleisterlee said of the proposed appointments.

The company also announced that, as planned, Ad Huijser will retire from Philips’ board of management, effective April 1, 2006, as well as his role as CTO.

“Ad Huijser has made a significant contribution to Philips during his 35-year career with the company - in particular overseeing the company’s research activities that form the cornerstone of the advanced technologies we bring to market. We’ll miss his contribution on the board, and wish him all the best for his retirement,” Kleisterlee added.

For the CTO role, Huijser will be succeeded by Rick Harwig, currently CEO of Philips Research, effective April 1, 2006.