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Amsterdam (pte022/13.03.2003/12:10) - Netherlands based electronics group Philips http://www.philips.com is cutting 1,600 jobs in its chip production division, the company announced today. The personnel reduction will affect jobs in the USA and Europe.
Philips also intends to shut down several of its semiconductor factories and cut research spending in this area to 960m euros (minus 200m euros). The goal of these measures is to reduce the deficit in the company's semiconductor business and return to profits in the fourth quarter of 2003.
Philips Semiconductors http://www.semiconductors.philips.com is the third largest chip producer in Europe after Infineon and STMicro. The division employs 34,000 people.
"Uncertainty due to the political situation has also caused uncertainty among consumers. They are therefore spending less on information technology and tend to be more reserved in buying consumer electronics equipment," said Scott McGregor, CEO of Philips chip production. "Last year's growth prognoses belong in the realm of the imagination," he said.
Specifically, Philips intends to close two chip factories in the USA and reduce the capacity of other factories by up to 20 per cent. The restructuring is expected to cause non-recurring costs of up to 270m euros. The depreciation is to be distributed in results over the next three quarters. Philips expects yearly savings of up to 250m euros from this move.
Last year Philips posted a loss of 537m euros in its semiconductor business. Philips Semiconductors brings in 25 per cent of group turnover. The group reported a total loss of 3.206m euros in 2002.
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