Hector Ruiz, chairman of Advanced Micro Devices spin-off Globalfoundries, will resign from the company in January. The announcement follows the emergence of his name in connection to the Galleon Funds insider trading case.
Ruiz "will take a voluntary leave of absence effective immediately before resigning from the company in January," according to a statement Monday from the Globalfoundries board. Ruiz had submitted his resignation to the board in September with an effective date of January 4, 2010, the statement said.
Hector Ruiz
(Credit: AMD)The resignation comes after an unnamed executive at AMD--which turned out to be Ruiz, according to a report--was cited repeatedly in a complaint filed last month by the U.S. attorney for New York's Southern District.
The case revolves around Raj Rajaratnam, who founded the Galleon Group, a New York-based hedge fund that manages $7 billion. Federal prosecutors have charged Rajaratnam and five others with securities fraud, alleging they were involved in insider trading of well-known tech companies, including Intel, Google, AMD, and IBM.
All have said they are innocent, according to The Wall Street Journal.
The U.S. Attorney's complaint alleges Rajaratnam and others engaged in insider-trading activity when AMD was trying to reorganize and spin off its manufacturing operations--which eventually became Globalfoundries, which is a joint venture with the Abu Dhabi government.
Ruiz, who is also former CEO and chairman of AMD, has not been charged with a crime, according to The New York Times.
He will be replaced at Globalfoundries by Alan E. "Lanny" Ross, who will serve as interim chairman, effective immediately, until a permanent chairman has been appointed by the board, according to Globalfoundries. Ross, a current member of the Globalfoundries board, was previously president and CEO of communications chip supplier Broadcom.
Ruiz joined AMD in January 2000 as president and chief operating officer, and was named chief executive officer in April 2002. He was appointed chairman of the board in April 2004, and was named executive chairman in June 2008.
Ruiz was appointed chairman of Globalfoundries when it was formed in October of last year.
He spent 22 years at Motorola, and in his last post there, served as president of the firm's Semiconductor Products Sector. Ruiz also worked at Texas Instruments in the company's research laboratories and manufacturing operations.
commentary Hector Ruiz was quick to display righteous indignation about Intel's alleged unscrupulous business practices. Now--in one of life's delicious ironies--he's a central figure in the biggest scandal to hit Silicon Valley in years.
In a letter from Ruiz that still sits on AMD's Web site and is still signed above the title "Executive Chairman and Chairman of the Board Advanced Micro Devices," he rails against Intel for "breaking the law." And on another Web page bearing his photograph, there are more accusations leveled at Intel for its alleged "illegal" behavior.
In the coming months, Ruiz may face the same kind of scrutiny for illegal behavior that he campaigned against so zealously during his six-year reign as the CEO and chairman of AMD.
The 'truth' about Intel that Ruiz campaigned to expose. Ironically, the truth about the former AMD CEO is now at the center of a Silicon Valley scandal.
(Credit: AMD)And one of the operative phrases in that letter, "pattern of abuse," may turn out to be little more than facile argument that can easily be turned back on Ruiz himself, if it is established that he abused the trust placed in him by stockholders.
In short, if Ruiz was connected--however indirectly--to Raj Rajaratnam and the Galleon Group, then his--and his former company's--constant haranguing of Intel and the never-ending appeals to governments to go after Intel, lose some of their punch. Especially if it is little more than a stratagem to gain market share.
Based on the U.S. Attorney's allegations, Ruiz exhibited a pattern of behavior that would rightfully invite scrutiny on any CEO. As the deal to spin off AMD's manufacturing operations got closer, Ruiz allegedly talked freely with Danielle Chiesi, who worked for the New Castle hedge fund, about details of the deal, which at that time were confidential, insider information items. And Rajaratnam and Chiesi allegedly made large investments in AMD based on this information.
Ruiz was the man driving the spin-off of AMD's manufacturing operations. In earnings conference calls, while he was still chairman of AMD, he was the go-to man for information about AMD's efforts to streamline its manufacturing operations--which AMD at one time called "asset lite"--and ultimately the person spearheading the deal with Advanced Technology Investment and Abu Dhabi-based Mubadala Development, who invested billions in the spin-off.
And what's the greatest irony of all? As the U.S. government reportedly readies an antitrust case against Intel, the government may also be forced to examine the unscrupulous behavior of one the principals who pushed the government to move against Intel. That's some pretty heavy irony.
The former CEO and chairman of Advanced Micro Devices, Hector Ruiz, has been linked to the Galleon insider-trading case, according to a report in the Wall Street Journal on Tuesday.
Hector Ruiz
(Credit: AMD)This revelation comes after an unnamed executive at AMD was cited repeatedly in a complaint filed by the U.S. Attorney for New York's Southern District earlier this month.
The case revolves around Raj Rajaratnam, who founded the Galleon Group, a New York-based hedge fund that manages $7 billion in funds. Federal prosecutors charged Rajaratnam and five others with securities fraud, alleging they were involved in insider trading of well-known tech companies, including Intel, Google, AMD, and IBM.
"We are thoroughly reviewing the situation," AMD spokesperson Drew Prairie said. "We are not aware of any allegation of criminal misconduct on the part of any current or former AMD employees, nor have any current or former AMD employees been charged with a crime."
Ruiz is currently chairman of Globalfoundries, the chip manufacturing concern that was spun off from AMD in October of last year. A Globalfoundries spokesman had no comment.
AMD was prominent in the U.S. Attorney's complaint, which alleges Rajaratnam and others engaged in insider-trading activity when AMD was trying to reorganize and spin off its manufacturing operations last year--which eventually became a multibillion-dollar deal. The U.S. Attorney's complaint makes the first references to an AMD executive in June 2008. At that time, AMD, seeking a buyer for its manufacturing operations, entered into negotiations with investors based in Abu Dhabi.
As the announcement of the spin-off got closer, Danielle Chiesi, who worked for the New Castle hedge fund, is alleged to have said that "she had spoken with the AMD Executive, who told her that 'Wall Street will be shocked,' and that AMD will 'definitely make the announcement...before they print (quarterly earnings).'" Alan Kaufman, Chiesi's attorney, said his client would plead innocent to the charges.
The spin-off was ultimately announced on October 6 when an investment was secured from Advanced Technology Investment and Abu Dhabi-based Mubadala Development. At that time, AMD said the new company had secured about $5.7 billion of "confirmed, pledged investment."
Ruiz served as CEO and chairman of AMD until July 2008, when Dirk Meyer was appointed CEO. He remained as chairman of AMD until October when AMD's manufacturing operations were spun off. At that time, he become chairman of Globalfoundries.
Intel is accused of monopolistic business practices pretty much all of the time. So much so that the big bully boilerplate isn't worth repeating.
The latest reports of charges against Intel are interesting because of the timing. According to this March 10 headline, the Korean Fair Trade Commission has ruled against Intel. That would be news if it hadn't been news eight months ago. Here's an English-language summation of the case that was news in June 2008. (CNET News report here.)
Not that all complaints about Intel business practices are unfounded. Certainly not. But how many times do we have to hear the "news" that Intel leveraged its market position to finesse a deal? (Answer: ad nauseam.) In this case, the American Antitrust Institute selectively translated text from an old 133-page report to show that Intel coerced Samsung (and others) into using Intel chips instead of those from Advanced Micro Devices.
Again, worth putting out there eight months ago but probably not today.
And let's remember that, of course, Nvidia and AMD never do this in the graphics chip market when they're trying to reel in a customer. No enticements, no sweeteners to close the deal. Absolutely not. Perish the thought.
But I shouldn't rush too quickly to Intel's defense. There will be plenty of real news related to Intel's market dominance in the coming years. The intensified focus now on Intel's business practices is happening against the backdrop of the severe financial straits of its sole competitor. No one wants to see AMD go away. (No stronger advocate of this than AMD itself.)
That said, the question should always be asked: is it really unfair competition or is it merely unfair as Intel's less-successful rival sees it? The grumblings I most often hear about are MDF and bundling. Different parties' interpretations of Intel business practices (real or imagined) connected to Market Development Funds and bundling are too varied and too byzantine to cover here. But that two-second Intel jingle at the end of a Dell, Hewlett-Packard, or Sony TV commercial can have, for AMD, an ominous ring to it.
All of the above gets (very) complicated because of Intel's dominant market position. One question is, where does MDF end and alleged brass-knuckles, restrictive bundling begin?
"So, Mr. Computer Maker, want some peppier graphics in that Netbook? We got this thing called the GN40...So you might want to reconsider that Ion thing." Nvidia may have a point here. But are they being out-bundled or simply out-maneuvered by Intel? You decide.
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