Three Chip Companies Cut Back

By Michael Singer

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While the fires burn bright for Intel this week, three of its rivals are making drastic cost cutting measures including laying off workers just to keep up.

AMD Thursday confirmed that it will finish eliminating some 1,550 positions this week as part of its worldwide cost reductions announced in November 2002. The Sunnyvale, Calif.-based semiconductor maker was originally expecting to reduce headcount by 15 percent (about 2,000 jobs).

The company also denied reports that it has cancelled its joint chip plant in Singapore with the world's second largest semiconductor contract manufacturer, UMC.

Taiwan's Economic Daily News reported Thursday that all AMD orders had been shifted to Armonk, N.Y.-based IBM and that the chip plant project had been canceled. A spokesman for UMC was quoted as saying that the company would "continue to work with AMD," and is still their foundry. As for the fab in Singapore, UMC said "no further decision has been made."

Adding to the chip sector wreckage, National Semiconductor said Thursday that it is looking to sell off its Information Appliance unit, cut 5 percent of its workforce and outsource its advanced chips to Taiwan Semiconductor Manufacturing Corporation (TSMC).

The Information Appliance unit consists primarily of the Geode family of products, as well as its cellular baseband business.

The deal with TSMC establishes it as National's supplier of wafers for products with feature sizes at and below 0.15-micron so that the company does not have to build a 300mm wafer fab.

The Santa Clara, Calif.-based granddaddy of chipmakers also said it will realign some manufacturing, product development and support personnel. The job cuts impact 500 positions from the company's worldwide workforce of 10,000.

"We have cast our nets far and wide, but in this challenging environment we are prioritizing R&D spending on product areas that drive higher returns sooner." National chairman, president and CEO Brian Halla said in a statement.

And as if that weren't bad enough, for the first time since 1985, Micron Technology said it has been forced to reduce its work force citing low prices and sluggish demand for its products.

The Boise, Idaho-based memory-chip maker said it will hand out notices this week to 10 percent of its worldwide workforce or close to 1,870 employees.

As part of its reorganization, the company said it will keep focused on migrating its products to .11 micron manufacturing process technology.

"We remain committed to the long-term growth opportunities for our company and our industry. These actions will lower our cost structure, allow us to better focus our product portfolio, and continue to invest in new technology," Micron president and CEO Steve Appleton said in a company statement.