Home > AMD, Cadence, chip designers, global semiconductor market, iSuppli > Semicon job cuts galore, but at what cost?

Semicon job cuts galore, but at what cost?

November 7, 2008

The world is plagued with so many job cuts all over again, thanks to the global financial crisis! Those laid off must be getting fed up! Those who are so far lucky to survive, will be spending anxious days. Everytime we have a recession, the first thing companies do is cut jobs on the pretext of cost cutting! The semiconductor industry is also going through such an exercise at the moment!

There have been reports in the media that EDA major, Cadence, will be cutting 625 jobs! Cadence plans to achieve an annual operating expense savings of at least $150 million through a combination of workforce and other expense reductions!

AMD also announced that it will cut 500 jobs worldwide! If that’s not enough, ST-NXP Wireless, to rationalize its product portfolio and development efforts, announced a plan to reduce its global workforce by about 500, including subcontractors, from the current total of over 7500 people.

Oh my!! I wonder who all are getting laid off! I hope only very few good chip designers as possible are laid off. Otherwise, how are these companies going to maintain their momentum in the global semiconductor industry if they lay off several designers?

One question! Why do companies need to hire so many people, only to dump them at the first sign of recession? And, at what cost? Is it going to make the companies nimbler, really improve profitability, improve their market standing, etc.? I wonder!

And what of the global semiconductor industry itself? What about the so-called consolidations? Besides cost cutting, what are the industry pundits really doing to try and revive semiconductors?

We do hear a lot about poor memory market, lower capex on fabs, but well, didn’t they all see it coming?

iSuppli reported recently that mainly due to oversupply, a number of semiconductor companies have been struggling with their average selling prices (ASPs) so low that they were not profitable even before the current economic turmoil!

Further, companies may even face problems in getting credit or worse, finding investors for a next upgrade or expansion. And how do companies basically deal with problems? By cutting costs, such as laying off personnel or merging with other company which creates redundancy, leading to the same result.

Every single person laid off is a consumer, besides being the company’s valuable asset, right? If he or she wasn’t valuable enough, then why was the hiring done in the first place? Also, if he or she gets laid off, won’t that effect the economy? If yes, won’t that translate into the global economy taking a longer time to recover? Job cuts are fine, but at what cost? Is the industry thinking about all of these?

We all talk about how companies should try and must try to bring the cheer back in Christmas spending! As a friend remarked yesterday in jest — “Which Christmas? This year, or next?”

Will job cuts bring the cheer back, especially in the Christmas spends? If no, then how is it helping the semicon and electronics (and all other) industries? Can you tell me?

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