Look all the way to the bottom Toshiba and NEC also mentioned.
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11/30 01:40
Fujitsu to Close U.S. Chip Plant, Fire 670 Workers (Update4)
By Minoru Matsutani
quote.bloomberg.com
Tokyo, Nov. 30 (Bloomberg) -- Fujitsu Ltd., the third-largest maker of mobile-phone memory chips, will close a U.S. plant, firing all 670 staff, after partner Advanced Micro Devices Inc. decided not to invest in the factory.
Fujitsu will shutter Fujitsu Microelectronics Inc.'s flash memory plant in Oregon at the end of January as chip prices slide on slowing handset sales, Takashi Takaya, Fujitsu senior executive vice president said.
The Tokyo-based company estimates the prices of flash memory chips, the main memory in mobile phones, will halve in the six months ending March 31, causing Fujitsu to post the biggest-ever loss this year. Advanced Micro of the U.S. decided not to extend its equity partnership with Fujitsu on the Oregon plant after at least three months of discussions with the Japanese company.
``Fujitsu might as well withdraw entirely from the flash memory chip business,'' said Yasuhiro Shinbayashi, the chief fund manager at UFJ Asset Management Co., who helps manage 150 billion yen ($1.2 billion), including Fujitsu shares. The chip business ``is eating up Fujitsu's profit from software and services.''
Fujitsu, which expects to lose 310 billion yen in the year ending March 2002, will spend 350 billion yen to cut jobs and reorganize its businesses, mainly its chip division. The unit will post losses of 50 billion yen in the year ending March 2002, while its software and services business will earn 150 billion yen.
Takaya declined to give an estimate of the cost of closing the plant until the company finds a buyer for the facility.
The job cuts were included in an announcement last month, outlining plans to reduce the group workforce by 20,900, he said.
Advanced Micro
The Oregon plant was set up following a trip in 1984 by the then state Governor Vic Atiyeh to Japan, the first by an Oregon governor to Japan. The governor's visit was aimed at attracting Japanese investment, mainly in electronics and computers, to Oregon at a time when the state's primary industry of forestry and wood products was declining.
Fujitsu asked Sunnyvale, California-based Advanced Micro, which has a 50:50 flash memory making venture with Fujitsu in northern Japan, to invest in the Oregon plant.
Advanced Micro, which posted a loss of $187 million in the third quarter on plunging chip prices, concluded that investing in the plant is risky, said John Greenagel, a spokesman at Advanced Micro, the second-largest flash memory maker after Intel Corp.
``It was mainly a victim of timing,'' Greenagel said. ``The flash memory market has really been hit hard.''
When demand recovers, it will be for high-end flash memory chips, which the 13-year-old Oregon plant doesn't produce, he said.
After the closure, Fujitsu's sole mobile-phone chip facility will be Fujitsu AMD Semiconductor Ltd., located at Fukushima prefecture, northern Japan.
Fujitsu shares rose 5 yen to 1,025 yen. The stock is down 39 percent this year.
Chip Plant
Fujitsu and other Japanese chipmakers are closing and idling factories in Japan as well as in other overseas locations.
NEC Corp., the world's third largest chipmaker, will shutter plants in the U.S. and the U.K. which make dynamic random access memory chips, the main memory in personal computers. NEC decided to close the plants in the year through March 2002, after prices of DRAM chips plummeted below production costs.
Toshiba Corp., the second-largest chipmaker, is in talks with Infineon Technologies AG of Germany to merge the DRAM business as both companies are losing money in the division. Hitachi Ltd. yesterday said it will halve the workforce at its Singapore chip plant.
Non-memory chips are also dragging such Japanese chipmakers' earnings because of sluggish demand for PCs, mobile phones, telecommunications gear and other digital equipment. In the second half of this calendar year, Toshiba, NEC and Fujitsu are asking local employees in semiconductor factories to take a few days off. During such furloughs, the companies will pay 80 or 90 percent of salaries. |
