|NEC plans major cutbacks in chip production|
By Jack Robertson
(07/31/01 12:57 p.m. EST)
NEC Corp. Tuesday continued to shake up its loss-plagued semiconductor group by closing aging 6-inch wafer lines in Japan, cutting production in half at its Scotland fab, and merging chip assembly operations, resulting in a loss of 4,000 jobs.
Last week NEC reported a $140 million operating loss in its Electron Devices group in the first fiscal quarter ended June 30.
The scale back comes only four days after NEC announced it was spinning out its optoelectronic and microwave components operation into a separate subsidiary.
The chip firm also continued to cut its semiconductor capex spending this fiscal year, now planning a 50% reduction to $975 million.
The firm also disclosed it will shift control of its existing DRAM production at its Hiroshima fab by 2004 to Elpida Memory Inc., its joint venture with Hitachi Ltd. The Hiroshima fab currently acts as a foundry making DRAMs for Elpida, butNEC officials said they want to be out of all DRAM production in three years.
The chip plant cutbacks revealed that NEC, like many Japanese firms has resorted to using a large number of contract workers for lower costs and to avoid the lifetime employment commitment for regular company personnel. NEC said half of the 4,000 job reduction involves contract employees.
NEC detailed its earlier-indicated cutbacks at its Livingston, Scotland fab, announcing nearly a 50% cutback in production to 15,000 wafers a month in the second half. The work force will be reduced from 1,600 to less than 1,000.
The cutbacks also include closing a 6-inch fab line at its Sagamihara facility, which will be consolidated into an 8-inch line at the fab. In addition NEC said, "other domestic 6-inch fab lines at other sites will be shifted to 8-inch lines at these locations."
Three chip assembly plants in Japan will be consolidated into a single operation, NEC Semiconductors Kyushu Ltd., to be established in October. Two other assembly plants at Yamagata and Takahata will be merged into one unspecified location in the second half.
NEC reiterated that a planned production expansion will be frozen at its joint venture fab in Shanghai, Hua Hong NEC Electronics Co. Output will remain at 20,000 wafers a month at the Chinese fab.