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Mergers in tech industry sees no sign of stopping

Posted: 28 Oct 2015 ?? ?Print Version ?Bookmark and Share

Keywords:semiconductor industry? consolidation? M&A? merger?

The layoffs so far

The tech industry has sent out tens of thousands of pink slips in the past year related to a mix of mergers, market slowdowns and corporate woes.

Among chip companies, Cypress reportedly laid off 20 per cent of staff or 1,600 people in March after its $4 billion merger with Spansion. Qualcomm laid off 15 per cent of its staff or 4,700 people in July under pressure from investors.

Their customers have also made deep cuts. In June, Ericsson laid off 2,100 people including 1,700 in R&D. In August, Taiwan's HTC laid off 2,250 people, and China's Lenovo laid off 3,200, following its acquisition of Motorola's cell phone business and IBM's server division. Last year, Microsoft announced plans to lay off 18,000 employees, two-thirds of them related to its acquisition of Nokia's cell phone business.

Jones of IBS believes this year's semiconductor mergers will vary in how many jobs they shed depending on their product and financial goals. For example, he expects fewer layoffs from the $16.7 billion Intel/Altera and $10 billion NXP/Freescale deals and more from Avago's $37 billion bid for Broadcom.

"Historically, Avago has made big headcount reductions and we don't see that pattern changing," said Jones, believing the company will use the deal to prepare for still more acquisitions.

Broadcom had already cut 2,500 jobs in July 2014 when it exited the cellular base band business. Combined with Qualcomm's cuts it suggests Southern California could take an outsized hit of the job losses in semiconductors.

Semiconductor mergers

2015 semiconductor mergers as of August (Source: IC Insights)

"Southern California was hit before when the aerospace industry consolidated at the end of the cold war C it's part of the nature of the tech industry, but we are concerned to see the number of tech professionals losing jobs in a relatively small area," said Russ Harrison, government relations director for the IEEE-USA.

Harrison expressed concern corporations may be getting more callous about layoffs.

"It used to be companies took more responsibility for their employees so when one part of the company had trouble it would retrain workers to move to another part, but now employees seem to be disposable cogs," he said, pointing to big cuts in Microsoft's Nokia group.

Harrison also noted the local power utility, Southern California Edison, announced in February plans to shift 500 jobs to India. "People are saying they can't find good Americas to fill jobs, but Microsoft and Qualcomm are laying off thousands of them," he said.

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