Semiconductors and Components

Jobs Cuts Pile Up as Chip Firms Adjust

27 January 2014

Even as the global economy starts to regain some traction in the western hemisphere the structural changes affecting the semiconductor industry are producing major job cuts.

For the most part they are not of immediate and emergency nature of cuts implemented in the height of the global recession. But they are significant and all the more difficult to take when companies are profitable.

Intel (Santa Clara, Calif.) is the largest chip company in the world but it got there on its strength in PC processors and has been struggling since it failed to catch the move to smartphone and tablet computing. The company has revealed it plans to reduce its global workforce of 107,000 by about 5,400, or about 5 percent, during 2014.

Nonetheless the announcement came the day after Intel announced a net profit of $2.6 billion on sales of $13.8 billion in its fourth quarter. For the full year Intel made a net profit of $1.89 billion on sales revenue of $52.7 billion. Both the sales and the profit were marginally down.

The job cuts are likely to retirements, voluntary programs and "other options" according to an Intel spokesperson quoted by Reuters. In addition Intel typically replaces about 4 percent of its staff each year. The difference in 2014 is that Intel is likely to be on close to a hiring freeze.

Texas Instruments (Dallas, Texas) made a similar move, announcing it is cutting 1,100 jobs with an emphasis on its embedded processing division and its presence in Japan.

The cuts were revealed in the same statement that TI announced I had made a net profit of $511 million on revenue of $3.03 billion in its 4Q13. TI employed about 34,150 employees at the end of the 3Q13, so the moves can be seen to be roughly on a par with Intel's with TI choosing to lay off about 3 percent of its employees. For the full calendar and financial year 2013 TI made a net profit of $2.16 billion on sales of $12.21 billion.

TI said it is not exiting any markets or discontinuing any particular product lines but that it is reducing investments in markets that do not offer sustainable growth and returns.

Renesas Electronics is a different case. The company, the result of a merger of the semiconductor units of Hitachi, Mitsubishi Electric and NEC has stuggled since its creation. The company is still the world's largest supplier of automotive microcontrollers but the loss-making company acknowledged it is in discussions to cut more jobs, about 5,400 or about 20 percent of its Japanese work force to be achieved by March 2016.

In October 2012 Renesas Electronics was bailed out by Innovation Network Corp. of Japan (INCJ) which was scheduled to provide 150 billion yen (around US$1.5 billion) in return for a majority stake in the company. A group of about 10 customer companies was set to invest a further 50 billion yen in part to avert a potential takeover by private equity firm Kohlberg Kravis Roberts.

In a statement the company said that report of job cuts did not constitute an official announcement but that it was looking a a variety of measures including "workforce planning" but that nothing had been decided.

Related links and articles:

Broadcom to Cut Up to 1,150 Jobs

Intel Sells Cloud TV Platform to Verizon

TI Launches Reference Design Library

Renesas Warms to FDSOI

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