How Hassane El-Khoury took the baton from TJ Rodgers at Cypress Semiconductor
Editor's note: This is the first in a series of EE Times articles that will profile the CEOs and other top executives who lead many of the semiconductor industry's most important companies. These stories will focus on what makes the leaders of the industry tick and what initially drew them to electronics.
When Hassane El-Khoury was named CEO of Cypress Semiconductor in 2016, to say he had big shoes to fill would be an understatement.
El-Khoury, at the age of 36, was taking the helm of Cypress from none other than TJ Rodgers, a semiconductor industry pioneer and Silicon Valley legend who had founded the company and been running it since El-Khoury was two years old.
But what El-Khoury lacked in experience, he made up for in tenacity. "I had the confidence," he said in a recent interview with EE Times. "I don't shy away from a challenge, I don't shy away from risk. I manage it."
Importantly, upon landing the job, El-Khoury didn't have the perception that he was taking over the company from some larger-than-life figure. Instead, he looked at it as picking up the baton from his boss and mentor, a man he knew well and respected, and one of the people he credits for his rapid ascension through the ranks at Cypress.
"I didn't grow up in the Silicon Valley or the semiconductor industry," El-Khoury said "So the history that a lot of people have here with the persona of TJ, I did not have. I know [the persona] because I worked for him, I know him and I have a lot of respect for him. And a lot of the lessons I learned, I learned from him."
By the time he was named CEO, El-Khoury had been with Cypress for nearly 10 years, including nearly four years running the company's largest group, the Programmable Systems Division, as an executive vice president. He was the primary author of what came to be known as Cypress 3.0 — the blueprint created by he and other company leaders for the future of Cypress in the post-Rodgers era.
"I have the ability to see the signal through the noise," says El-Khoury. "And once I see the signal, then for me it's very easy to translate that into action that will translate into reshaping of an organization of a company."
When Cypress announced Rodgers' retirement in April 2016, the board of directors created an office of the CEO — made up of El-Khoury and three other high-ranking executives — to manage the company’s daily operational activities. That group, led by El-Khoury, drew up Cypress 3.0 as a roadmap for the new CEO so that he or she could hit the ground running. The blueprint clarified that Cypress would focus on the automotive, industrial or IoT markets and suggested that the company would walk away from applications where it wasn't among the top three vendors and didn't have a clear path to become the market leader.
At the time, El-Khoury didn't know he would be the successor to Rodgers. The company's board of directors conducted a four-month CEO search, considering both internal and external candidates, before it handed El-Khoury the reins in August 2016.
"My focus at the time was not on how I get the CEO job," El-Khoury said. "My focus was on making sure that the company didn't lose its way at that critical junction."
He knew that if the company didn't maintain its trajectory during the transition to a new CEO, it would be detrimental. "I knew that if we didn't do the right job between when TJ retired and when the new CEO came in, we would all lose," he said.
Like many EEs, El-Khoury's electronics odyssey began as a love story. Growing up in war-torn Lebanon, he was fascinated by the way things worked, but had no idea what engineering was or what electronics was. His "epiphany" moment came at the age of 10 when he was given a remote-controlled car.
"It was like magic — where I could turn a knob and make a car across the room move," he said. "To me, that was magic. I took it apart, wanted to see what was inside and all that, and that got me on the trajectory of curiosity. Curiosity led to passion, passion led to learning, and learning led to a career."
Once he had disassembled the remote-controlled car, El-Khoury had no intention of putting it back together again. At the time, blackouts were very common in Lebanon, and El-Khoury used the components of the car to create a remote-controlled flashlight that his father could use to guide him up the stairs in the dark when he came home from work.
El-Khoury came to the U.S. at the age of 17 with a suitcase and a one-way ticket. He had grown up going to French-language schools, learning how to speak English from watching MTV and VH-1. He attended Lawrence Technological University in Southfield, Mich., earning a BSEE. While in school, El-Khoury started an internship with automotive systems supplier Continental Automotive Systems, which morphed into a full-time job before he had even graduated. During his final two years at Lawrence Tech, El-Khoury worked full time during the day and attended school at night.
While at Continental, El-Khoury's distaste for doing mundane tasks (which continues to this day) led him to automate many tasks and processes in each of the roles that he took on. He eventually automated so much of his work there that he could get his job done in about two hours per day.
"I literally designed myself out of a job by the time I left Continental, which is exactly the reason I gave my manager when I decided to move on," he said.
He knew relatively early on that he eventually wanted to go into management. But he was very specific in knowing that he wanted to go into engineering management. So rather than pursue an MBA or an advanced engineering degree, El-Khoury pursued what at the time was a relatively new degree, a master's in engineering management from Oakland University in Rochester Hills, Mich.
El-Khoury joined Cypress as an applications engineer, but quickly moved on to other roles within the company. He eventually ran the company's automotive business unit, creating a strategy for human-machine interface technology used in cars. By late 2012, Rodgers elevated him to the executive vice president role, making him the youngest EVP in the history of the company.
The Inside Candidate
The board of directors named El-Khoury to be Rodgers successor in August 2016, and he immediately hit the ground running, launching restructuring that eliminated about 500 jobs worldwide, or roughly 8% of the company's total workforce. The goal of the restructuring — spelled out in Cypress 3.0 — was to focus Cypress on areas deemed strategic.
"That was not a cost-cutting initiative, it was a re-positioning initiative, using [those resources] to hire staff and invest in areas that we deemed strategic — which is automotive and IoT — and therefore cutting investment and business units that were not strategic or aligned with that provision," El-Khoury said.
El-Khoury's familiarity with Cypress and his central role in creating the company's post Rodgers-era strategy allowed him to take decisive action, whereas a new CEO brought in from outside the company may have taken six months to arrive at a plan. "That's the benefit of internal candidates," El-Khoury said.
So far, the results have been good. Cypress has held firm to the Cypress 3.0 blueprint and today has a revenue split that's roughly equal between its automotive, IoT and a combination of legacy consumer and industrial products. The company's stock price is up about 60% since El-Khoury took the helm nearly three years ago. Prior to the first quarter of this year, when Cypress's sales slipped by 11%, it had reported consistently strong gains in sales and profit for two years.
While he wasn't intimidated by the challenge of following the legend of Rodgers, El-Khoury did see significant risk in following in the footsteps of a founding CEO that had been at the helm of Cypress for 34 years. He knew that he was going to have to move quickly to set the company on a different path, and wondered if he would encounter resistance to change.
"What I did find was that people were very receptive," El-Khoury said.
Looking back, El-Khoury describes his appointment and early months in the CEO role as a humbling experience. "It wasn't the title," he said. "It was humbling that I was able to lead everybody into this journey. And I still maintain that humble feeling, because that's who I am. And as soon as I deviate from it, people will see right through it."