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Asia takes active part in evolving market dynamics

Posted: 24 Aug 2012 ?? ?Print Version ?Bookmark and Share

Keywords:cost cutting? workforce reduction? IC manufacturing?

The growth of the technology sector in Asia is as vast and as varied as the continent itself. While Japan and South Korea are at one end of the spectrum designing the latest gadgets, there are countries like China and India where manufacturing is at full swing supplying components for multinational electronics giants such as Apple. Southeast Asian nations are quickly entering the fold as well showing huge potential for trade and development.

For most tech vendors, the Asian market is ideal for expansion since it is unfettered by legacy systems and practices of Western countries. The region's sheer size, however, has proven difficult to navigate with nuances that make individual country markets unique.

As margins continue to shrink and business volatility increases, companies are hard pressed to reduce expenses across the board while still pushing to expand operations. Redundancies in the workforce are eliminated and streamlining becomes king. Several semiconductor firms have announced restructuring plans, most of which involve comprehensive job cuts, in this quarter alone.

Technology licensor Rambus said it expected to save $30 to $35 million by trimming 15 percent of its workforce. (See Rambus' restructuring plan involves job cuts.)

ON Semiconductor also announced that it will complete job cuts by the end of the third quarter as it targets $10 to $15 million in savings this year. (See ON Semi trims workforce to reduce overall expenses.)

There are also some companies that choose to cut their losses before profits plunge deeper. UMC revealed this week that it will close down its 200-mm fab in Japan in response to poor macroeconomic conditions. (See UMC board votes to close Japan fab.)

Revenue will always be a key driver in any business sector so seasoned industry players are emphasizing the need for diversification. Analog Devices claims it is experiencing a shift in customer demand as more start to depend on chip makers for systems-level solutions and not just components.(See ADI sees positive changes in converters sector.)

To prevent overcapacity and further price declines, companies are implementing defined investment roadmaps of M&A activities to build credible local capability while leveraging global assets. More funds are funneled to research projects that are likely to produce substantial results which typically generate real market share gains as economies improve.

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