Lam Research CEO leaves amid misconduct inquiry, fourth chip boss this year to face such allegations
Lam Research Corp. Chief Executive Martin Anstice resigned Wednesday amid allegations of misconduct, the fourth chief executive of a major chip company to leave amid such an inquiry this year.
Lam LRCX, -6.40% , one of the largest chip-equipment companies in the world, said that an investigation by the board and an external law firm into allegations of misconduct in the workplace will continue. Anstice resigned and will not receive any severance benefits, Lam stated in its announcement.
“Lam Research takes all allegations of misconduct seriously,” lead independent director Abhi Talwalkar said in the news release.
Anstice is the fourth chief executive of a major semiconductor firm to leave his company this year amid largely unexplained allegations of impropriety. Intel Corp. INTC, -4.75% Chief Executive Brian Krzanich left that company in June after Intel’s board learned of an inappropriate relationship he had with a co-worker. A week later, Rambus Inc. RMBS, -5.72% CEO Ron Black was fired for a violation of the company’s code of conduct, and Texas Instruments Inc. TXN, -5.00% CEO Brian Crutcher resigned in July for a similar violation.
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The departures have happened at the same time as the rise of the “Me Too” movement, which has exposed some male executives’ mistreatment of female employees. The chip sector is one of the oldest in tech, and is thought to be extremely male-dominated.
Intel, for example, had 73.5% male employees as of 2017, which was actually an improvement from 76% the year before, as Krzanich made it a stated point to attempt to change a workforce that was largely male and white. Companies are not required to make public the demographic makeup of their workforce, despite reporting the information every year to the federal government, but chip companies that have reported show a heavy majority of male workers — Nvidia Corp. NVDA, -7.60% reported having 81% male employees in 2018, for example.
A Lam Research spokeswoman said Wednesday afternoon she had nothing to add beyond the news release, which was vague about the allegations, but seemed to suggest a wider problem than just the chief executive in describing them as “allegations of misconduct in the workplace and conduct inconsistent with the company’s core values, including allegations about Mr. Anstice.” The company did say that none of the allegations included financial misconduct, and reiterated its guidance for the quarter.
Anstice will be replaced by President and Chief Operating Officer Tim Archer, who has been COO since 2012 and was being groomed to eventually take over the top job since receiving the president title in January. Evercore ISI analyst C.J. Muse said that Lam’s plans to eventually replace Anstice with Archer should lead to an easy transition and little change in Lam’s direction.
“We have known Tim for more than a decade (coming over during the Novellus acquisition in 2012, which he joined in 1994) and we expect he will be an excellent fit, seamlessly transitioning into the CEO role and the company likely not to miss a beat under his leadership,” wrote Muse, who has an outperform rating and $ 185 price target on the stock.
Lam has a market capitalization of more than $ 23 billion, but has struggled this year amid concerns about a slowdown in the semiconductor sector that started with chip-equipment suppliers. Lam produced strong earnings results in October and quelled some fears, but a lot is riding on the current quarter and coming months.
“We believe Lam is entering a new cycle in the December period,” Instinet analyst Romit Shah wrote in an October note after Lam’s most recent earnings report. “Whether the recovery is U-shaped or V-shaped is unclear, but implied shipments in C3Q suggest that Lam won’t be cutting numbers anytime soon.”
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Lam shares have declined 18.7% so far this year, as the S&P 500 index SPX, -3.24% has gained 1%. Analysts are largely bullish, with 14 of 22 analysts tracked by FactSet labeling the stock the equivalent of buy and the rest calling it a hold. The average price target on the stock is $ 195.65, more than 30% higher than current prices.
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