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LSI Logic to cut 20 percent of workers

Posted: 18 Jan 2002 ?? ?Print Version ?Bookmark and Share

Keywords:lsi logic? cdma? wireless handset? digital subscriber line modem? dsp communications?

LSI Logic Corp. announced Tuesday (Jan. 16) that it will reduce its worldwide work force by 20 percent, and divest the business units which develop chipsets for CDMA wireless handsets and digital subscriber line modems.

LSI Logic chairman Wilf Corrigan said about 1,400 people would be affected by the layoffs. The company's original manufacturing site in Tsukuba, Japan, will be restructured, moving more of LSI Logic's manufacturing to the company's newer facility in Gresham, Ore.

Plans to divest the DSL operation are not surprising, said Will Strauss, president of research firm Forward Concepts (Tempe, Ariz). "On the DSL front, LSI Logic was mostly a foundry for Alcatel's DSL product line. But they never hung the shingle out on DSL. They never really got much traction."

The CDMA unit is a different story. Qualcomm Inc.'s semiconductor business dominates the baseband processor market for CDMA mobile phones. LSI Logic, DSP Communications, VLSI Technology, and Texas Instruments all signed license agreements with plans to go head-to-head with Qualcomm in this area. But after Intel Corp. acquired DSP Communications and Philips Semiconductors acquired VLSI Technology, both companies backed away from developing baseband processors for CDMA handsets. By selling off its CDMA unit, LSI Logic is also exiting the race.

Strauss said a lack of design wins could have hurt LSI Logic's operation. "I only knew of one design win," he said, and that was not with a first-tier or second-tier handset manufacturer.

The company expects to report flat revenues for its fourth quarter when financial results for the quarter are reported after the close of markets nest Wednesday (Jan. 23). In a statement, the company said it "will meet its guidance for 2001 fourth quarter revenue growth of between zero and 5 percent sequentially" from the $397 million reported in the third quarter. Also, a pro forma loss of 23 cents per share is expected for the fourth quarter.

"We are emphasizing our core strengths and concentrating on those parts of the communications, storage, and consumer electronics businesses where we have leadership positions," Corrigan said. LSI Logic management is "in discussions" to sell the CDMA handset and DSL modem business units, he added.

LSI Logic is emphasizing digital set-top, DVD, and digital video applications. Last year, it bought C-Cube Microsystems Inc. in a stock swap valued at $851 million.

David Lammers and Robert Keenan

EE Times

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