Chipping costs

In a move to trim expenses, analog semiconductor house National Semiconductor is to cut its global workforce by approximately 6%.

The actions will affect approximately 550 people, most of whom work in National’s manufacturing plants in the United States, Europe and Asia. As a result, the company expects to incur approximately $22-$26 million of severance and related expenses, most of which will be recorded in the third quarter of fiscal 2005.

National’s capacity utilisation percentage in its wafer fabrication plants ran in the mid-90s for most of fiscal 2004. However, during National’s fiscal 2005 second quarter, which started August 30, 2004, the company’s wafer fabrication utilisation rates declined to the mid-60s due to significant inventory reductions in the distribution channel and lower expected demand in some markets. Hence the reason for the cuts.

In addition to trimming personnel from its factories, National is eliminating approximately 100 people from several product line and support roles at various sites, including it’s corporate headquarters in Santa Clara, CA.