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Philips takes steps towards recovery of semicon division

Posted: 18 Mar 2003 ?? ?Print Version ?Bookmark and Share

Keywords:philips electronics? digital consumer products?

Royal Philips Electronics has announced and outlined an action plan aimed at returning its semiconductor division to profitability by Q4 this year. The recovery efforts of the company will be towards that of accelerating the focus on Philips Semiconductors' core portfolio of connected consumer applications, both in terms of strategy and R&D spending, while exiting unprofitable non-core businesses.

In addition to the previous closure of Philips' semiconductor fabrication operation in Albuquerque, New Mexico, the outlined strategy will call for the closure of its San Antonio, Texas fab this year. The combined Albuquerque and San Antonio actions is targeted to reduce overall CMOS capacity by about 20 percent, leading to a utilization rate that is expected to deliver positive operating results in Q4 and still include capacity for growth.

Over the course of 2003, Philips Semiconductors will complete the consolidation of a number of smaller non-manufacturing related sites and associated businesses, mainly in Europe and the U.S. A heightened focus on supply chain management and reduction of working capital will be driven by the activation of new IT systems. As a result, customer lead times in particular are expected to improve, including a reduction in end-to-end lead times from the initiation of an order to product shipment by up to 30 days to about 85 days

The planned actions will involve an overall headcount reduction of an estimated 1,600 by the end of this year. Most of the company's product lines in San Antonio, California are already dual-sourced, and others will be relocated to other Philips facilities, minimizing the impact on existing customers.

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