CEO interview: Mark Lippett of XMOS on leveling the playing field
XMOS was founded in 2005 and remains private so we started out by asking CEO Mark Lippett if the edge processor and microcontroller vendor is ripe for an initial public offering (IPO) of shares.
“As a growth technology company we have no specific plan for an IPO – not for a while,” Lippett said. “Should we consider it? Perhaps, but I think the market for IPOs is pretty-much closed right now,” he added.
Outside of China only a few chip-related IPOs have got away in the last year, Mobileye being one of the most prominent (see IPO for lossmaking Mobileye values company below $16 billion). Another was Sondrel Ltd. on London’s Alternative Investment Market (see Sondrel IPO sees biggest UK chip deal since ARM). However, the recessionary prospects for 2023 and the geopolitical uncertainty are likely to make financial matters unpredictable.
“Our totally available market is enormous and with more capital we could do more. But we have, through already available means, the ability to fund our fourth-generation silicon,” Lippett, said.
What must the UK do?
And with that we asked Lippett to talk more broadly about what’s important for a UK-wide semiconductor strategy, something that is under debate within Whitehall (see UK government opens inquiry about domestic semiconductor industry).
Lippett said the semiconductor industry needs four things: capital, talent, a supply-chain, and freedom to trade.
With regard to capital he said chip manufacturing is capital intensive and the UK should not try to chase after silicon-chip manufacturing although XMOS could make use of local manufacturing.
“With regard to talent: we struggle to find enough, particularly since we can no longer attract employees from Europe so easily,” he said. The more the government can do to ease that situation the better, he added.
As to the supply-chain Lippett said: “The UK can never be self-sufficient across the semiconductor supply chain but we do need to have skills and expertise that earn us “a place at the table.”
Lippett said that the freedom to trade wherever the opportunity is, is also important to UK companies.
A case for a fab?
“We are suffering collateral damage from the US-China sanctions. We are not a security threat. We are at the edge but we are being affected. How broad is the brush going to be that is used to legislate against open trade?” Lippett asked.
“When tariffs were introduced companies started moving their contract manufacturing out of China,” Lippett said. With export license controls it gets worse. Chinese companies do prefer to buy domestically unless there is a good value proposition. But we have that,” he added.
“We are not on a level playing field. Either the rest of the world stops raising barriers or the UK needs to step up and do something,” Lippett.
“As I said, chasing silicon manufacturing at a leading-edge node is out. You don’t build one node, you have to build many and it is very expensive. But maybe there is a case for a 65nm-to-16nm fab for IoT volume.”
Does globalization reverse?
Lippett also agreed that UK support for niches such as compound semiconductors and printed electronics, while not necessarily directly relevant XMOS, did make some sense. The barrier to entry is much lower and it has the potential to lead to growth opportunities in electronics and optoelectronics.
Finally Lippett said the UK should continue to support academic excellence which can give rise to the key innovations of the future and the next generation of engineering entrepreneurs.
“I don’t think such a fully globalized industry can simply go into reverse. While there will be changes and some duplication of resources, the semiconductor industry will continue to be highly dispersed.
So how does Lippett see 2023 panning out? “I think it will be difficult. Not as good as previous years. We expect the first half of 2023 to be challenging with a recovery starting in the second half. And then a return to growth in 2024 and 2025.”
By then the financial climate may be right to take XMOS public.