Motorola chip unit to cut 4,000 jobs, close plants

Motorola Inc. announced further job cuts Friday, eliminating up to 4,000 jobs from its semiconductor division over the course of this year. Cuts will come from contract and temporary employees, attrition, and both voluntary and involuntary severance programs, a company spokesman confirmed. Motorola is also phasing out four of its older chip manufacturing plants. Motorola decided not to break out the layoff numbers by business and location, said Ken Phillips, director of business communications for Motorola's Semiconductor Products Sector (SPS). He described the job cuts as "an incremental reduction" that will affect all job categories and all SPS operations worldwide. The layoffs will help Motorola "get its cost structure down to match current demand," Phillips said.

Of the four factories to be phased out, two are in Austin, Texas, one is in Phoenix, Arizona and one is in Toulouse, France, Phillips said. Workers at these factories won't lose their jobs, however, and will be placed in other manufacturing operations, he said. Like other SPS factories, the plants to be phased out make a variety of chips including those used in the automotive, communications and networking industries.

SPS operates in four major markets: wireless communications, where parent company Motorola is a key customer; automotive, in which SPS is the largest supplier worldwide; Internet, wireless and wireline networks; and a smaller business supplying digital consumer chips such as those used in digital televisions.

The bulk of the layoffs will occur in the first quarter of this year, and Motorola started informing staff Friday, Phillips said. "It's quite an unhappy place around here today," he said. "It's a very painful step. I hope we won't have to do any more (layoffs) within SPS." However, he added that Motorola couldn't promise that these will be the final layoffs needed in the division.

At issue are the excess chip inventories most of SPS's customers are still holding due to a drop in demand for their products caused by a slump in the U.S. economy. "They ordered a lot of product in the first half of last year," Phillips said. "We hope to see a resumption in (market) growth in the second half of this year."

Motorola has already gone through a series of layoffs in another of its businesses -- cellular products.

Last month, the company announced it would lay off 2,500 people as it winds down manufacturing operations at its Harvard, Illinois, campus. Motorola plans to finish shutting down its manufacturing operation at Harvard by June 30.

Motorola's fourth-quarter earnings announcement in January came after it issued a profit warning in December. The company blamed increasing manufacturing costs and operating expenses for slimmer profits, pledging to rein in expenses.

Last year, Motorola established outsourcing agreements with electronics manufacturer Flextronics International Ltd. and electronic manufacturing services company Celestica Inc. Motorola sold its manufacturing operations in Dublin, Ireland, and Mt. Pleasant, Iowa, to Celestica, eliminating 2,870 Motorola jobs.

Nokia Corp. has led the field of cell-phone makers, but competitive pressures and weakening demand for handsets has led to profit problems for the sector. Sweden's L.M. Ericsson Telephone Co. said in January it would outsource all mobile telephone handset production, while Nokia executives warned investors in a January conference call that demand would be weak for the next two quarters.

Motorola, based in Schaumburg, Illinois, can be reached at +1-847-576-5000 or via the Internet at http://www.mot.com/.

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