AUSTIN, Tex. -- Motorola Inc. today announced it will eliminate 12% of its semiconductor jobs, or 4,000 workers, and substantially reduce capital spending during 2001 in response to slowing chip sales.
Motorola said the workforce reduction will be achieved through attrition as well as voluntary and involuntary severance programs. The Motorola Semiconductor Products Sector, based in Austin, employs about 34,000 workers worldwide, and its revenues of $8.0 billion in 2000 made it the industry's sixth largest chip supplier.
"Each of our business units and support organizations has reviewed its circumstances and is making the necessary adjustments to help the sector meet its goals," said Fred Shlapak, president of Motorola's semiconductor sector. "While job reductions are extremely painful, they are a necessary part of our cost-reduction needs."
The company did not immediately release information about capital spending cuts or other budget reductions in its chip operations. Shlapak said Motorola continued to invest in R&D to build on embedded solutions for "the person, work team, home and auto."
At the start of 2001, Motorola officials said the company had already cut capital spending plans as part of belt tightening in the current semiconductor slowdown, which began in the third quarter of 2000. Motorola chopped $300 million from its fourth-quarter semiconductor capital spending, said Shlapak during a conference call with financial analysts in January.
Motorola said it had invested $2.4 billion in expansion of production facilities during 2000. The company today did not respond to requests for a revised figure on capital spending plans for 2001, but analysts at Deutsche Banc Alex. Brown in San Francisco said they believe Motorola has lowered its budget from $1.5 billion to a range of just $800-to-$900 million this year.
During the January conference call with analysts, Shlapak said Motorola had lowered its forecast for industry chip growth to a range of 10-to-15% in 2001. He said semiconductor orders fell 27% sequentially in the fourth quarter to $1.6 billion compared to the third quarter of 2000. Motorola's $1.9 billion chip sales in Q4 were 8% lower than the third-quarter prior period.
In today's layoff announcement, the Motorola chip president said some of the cost-reduction measures will be completed in the first quarter, while others will be concluded later in the year depending upon regulations and laws in various countries.
