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Ulrich Schumacher


After arriving at his Munich office in the morning, Ulrich Schumacher likes to pop a CD into a player on his desk and blast a track by singer James Brown. Nothing like the godfather of soul shouting "I feel good!" to get a tech manager psyched up for the day ahead, says Schumacher, 43, CEO of German semiconductor maker Infineon Technologies (IFX).

Lately, plenty of psyching-up has been in order. The semiconductor business is rugged in the best of times, but now it's brutal. Companies such as Micron Technology (MU) in Boise, Idaho, have posted quarterly losses--as businesses and consumers spend less on PCs, mobile phones, and other devices that run on semiconductors. Microprocessor king Intel Corp. (INTC), based in Santa Clara, Calif., has announced it will lay off 5,000 people. Even the normally irrepressible Schumacher, who races cars on weekends and typically leaves the office at 1 a.m., concedes he can get just plain tired. "Sometimes it's real fun," says Schumacher. "But there are also times when life is not very rewarding."

Schumacher doesn't stay down for long, though. And so far, his company seems to be coping better than most with a global slowdown. Yes, profit at the world's ninth-largest semiconductor maker is way down, plunging 84% in the quarter ended Mar. 31, to $20 million, on sales of $1.5 billion. Shares in Infineon, spun off from Siemens last year, are off 58% from their 12-month high. But shares of Broadcom Corp. (BRCM) in Irvine, Calif., which makes chips for broadband telecommunications, are down 85% after three losing quarters.

Schumacher has managed to stay in the race in part by shaking up the old-style culture at Infineon, still 71%-owned by Siemens (SI). When Schumacher became CEO in 1996, the company--then a Siemens division--was a collection of regional fiefdoms. Schumacher reorganized it along global product lines, such as chips for telecommunications or for the auto industry. He paid more attention to shareholders, meeting regularly with analysts and fund managers. He put up a stock ticker at the entrance to corporate headquarters so employees would also pay attention to the shares. It continually displays Infineon's share price in bright red letters. And he gave managers stock options. "He stands for a new breed of first-class manager," says Michael A. Sorokin, of executive search firm Heidrick & Struggles in Munich. Sorokin says he tried to poach Infineon managers before acquiring Schumacher as a client.

But that's not the whole story. Schumacher isn't one to follow corporate fashion. He has a bookshelf lined with management tomes, gifts from friends and business associates. They're all in mint condition, Schumacher jokes, because he doesn't read them. He listens to fund managers and analysts but does what he thinks is best.

The pundits told him to focus, and Schumacher did, up to a point. He sold the unit that made chips for entertainment products. But Schumacher refused to put all his money on one or two segments. Infineon's product range includes chips for smart cards, for cars, and for telecommunications. Infineon also makes so-called DRAM memory chips, a business that can be devastating in bad times but highly profitable in good. "Infineon will profit disproportionately when the recovery comes," says Matthias L. Schneck, an analyst at HypoVereinsbank in Munich.

Now, as the industry battens down the hatches, Schumacher is continuing to add employees and build a luxurious corporate campus in Munich. He has trimmed investment in some older technologies but is forging ahead with new capacity to make memory chips based on 300-millimeter wafer technology. That will allow more chips per wafer than is now offered by any competitor. "It makes no sense to cut investment and cut R&D in an industry that is so innovation-driven," says Schumacher.

Five weekends a year, Schumacher still races sports cars. His office is lined with trophies, but he frets: "They're all third places. That makes me nervous. Always finishing third is not exactly what I want to do in life." In business, anyway, he's determined to keep moving up the rankings.


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