News Article
ST to slash workforce by 3,000 outside of Asia
Number two European chip maker STMicroelectronics is to cut its workforce outside Asia by 3,000 in response to sluggish demand and the weak dollar. The company said that the cutbacks - to be completed by mid-2006 - were needed to "recover profitability after disappointing" results for the first quarter of 2005.
Number two European chip maker STMicroelectronics is to cut its workforce outside Asia by 3,000 in response to sluggish demand and the weak dollar. The company said that the cutbacks - to be completed by mid-2006 - were needed to "recover profitability after disappointing" results for the first quarter of 2005.
STMicro suffered a 10.5% fall in sequential revenues to US$2.1 billion in the first quarter of 2005. The company also made an operating loss of US$68 million and a net loss of US$31 million over the quarter.
At that time, the company’s chief executive officer Carlo Bozotti announced plans to cut costs by US$100 million a quarter and reduce capital spending during 2005 from US$2 billion to US$1.5 billion. He also hinted that further restructuring would be necessary to "strengthen our cost structure and strengthen our portfolio".
The decision to cut its workforce by 3,000 - around 6% of the total - shows how seriously the company is taking the current slowdown in the semiconductor industry. The weakness of the US dollar - which hurts European firms by making their products more expensive abroad - is another key factor in the decision.
The company said that the restructuring - details of which will be published in coming weeks - will cost between US$100 million and US$130 million. In 2004, STMicro achieved income of US$601 million on revenues of US$8.8 billion, making it Europe’s second largest chip maker after Germany-based Infineon.
STMicro suffered a 10.5% fall in sequential revenues to US$2.1 billion in the first quarter of 2005. The company also made an operating loss of US$68 million and a net loss of US$31 million over the quarter.
At that time, the company’s chief executive officer Carlo Bozotti announced plans to cut costs by US$100 million a quarter and reduce capital spending during 2005 from US$2 billion to US$1.5 billion. He also hinted that further restructuring would be necessary to "strengthen our cost structure and strengthen our portfolio".
The decision to cut its workforce by 3,000 - around 6% of the total - shows how seriously the company is taking the current slowdown in the semiconductor industry. The weakness of the US dollar - which hurts European firms by making their products more expensive abroad - is another key factor in the decision.
The company said that the restructuring - details of which will be published in coming weeks - will cost between US$100 million and US$130 million. In 2004, STMicro achieved income of US$601 million on revenues of US$8.8 billion, making it Europe’s second largest chip maker after Germany-based Infineon.
