The future of Siemens Semiconductor hangs in the balance as Siemens? chief executive warned that mid term profit goals could not be achieved without a fundamental improvement in the semiconductor business.
The company has announced a 10 point restructuring plan as it expects to lose more than DM1 billion this year. Siemens admitted it is considering selling or floating off some units
The semiconductor unit did managed to make DM109 million on the back of semiconductor sales worth DM 5.9 million for its third quarter. However the company also warned earnings would not keep pace with sales growth for the year.
Although chip losses are the most obvious problem, chief executive Heinrich von Pierer says four units have "acute problems" - semiconductors, power generation, personal communications and transportation systems.
The communications unit covers mobile phones, where Pierer admits Siemens has had trouble keeping up with changes in the market. The division?s global expansion plans also appear to have misfired as overseas competitors erode its home market.
Losing or even loosening control of the semiconductor or mobile phone units would fly in the face of the fairly successful strategy Siemens has been pursuing over the last few years.
There has also been no signs in recent months that Siemens is letting its investment in chips slide - last month it announced volume production of PC100-compliant SDRAM at 0.25 micron.
It is far more likely that the company will look for joint venture partners, or follow the Koreans in cutting production while hoping for better times. Aside from Germany the semiconductor unit has factories in Taiwan, Virginia and the UK, and these are the ones which currently look most vulnerable.
For the first three quarters Siemens showed a rise in net profit to DM1.78 billion, compared to DM1.70 billion a year ago. Sales grew to DM81.9 billion from DM71.2 billion.
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