More contracts for AMKR!
by: sshia (25/M/NY NY) 2147 of 2151
Zilog continues apace with streamlining efforts
Jennifer L. Baljko
Silicon Valley- With nearly a year of new leadership and
reorganization under its belt, Zilog Inc. last week forged ahead
with more streamlining efforts.
The chip maker announced it will outsource its assembly
operations and eliminate 384 positions from its facility in the
Philippines. Final test operations, also located at the
Philippines site, will remain open.
Rather than invest in developing its packaging technology, the
company opted to contract with Amkor Technology Inc., ASE
Inc., and Astra Microtronics Technology for those services,
said Robert Couch, Zilog's senior vice president.
"In February of 1998, we started looking at our operations and
making decisions about what adds value and what doesn't,"
Couch said. "Packaging assembly doesn't specifically add
value to our customers."
Zilog expects the outsourcing initiative to cut costs, but Couch
could not quantify what that amount would be. However, he
did say that "tens of millions of dollars" that may have been
earmarked for the assembly business could be reallocated to
other projects, such as manufacturing improvements and
product development in the communications,
integrated-devices, and home-entertainment markets.
The latest announcement, which, according to Couch, may be
the company's last big move for the time being, dovetails with
a string of decisions Zilog has made in recent months.
Shortly after being bought by investment house Texas Pacific
Group (TPG) in early 1998, Curtis J. Crawford, former
president of Lucent Technologies Inc.'s microelectronics
division, was named president and chief executive of the
Campbell, Calif., company.
Under his reign, Zilog embarked on a reorganization that
included regrouping products into more focused component
families; discontinuing products that did not fit into its core
strategy, such as the I Box, an Internet appliance Zilog sold as
a vehicle for its set-top-box chipset; installing a new
management team; and reducing the headcount at its Nampa,
Idaho, wafer fab.
"Over the last year, Zilog has repeatedly looked for ways to
align our resources with our business needs," Crawford said.
"This [outsourcing decision] is another step in achieving that
goal. We value the work of our dedicated employees in the
Philippines, but the magnitude of potential future investments
dictated that we look for smarter ways to handle package
assembly."
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