Still reeling from last year's downturn in its business, custom chipmaker LSI Logic is to cut about 1400 jobs, or 20 per cent of its workforce.
The move is part of LSI's ongoing restructuring as the company looks to find a buyer for its business units which produce chips for Code Division Multiple Access (CDMA) and Digital Subscriber Line (DSL) equipment.
The move to get out of the CDMA phone handset and DSL chip business comes as LSI looks to focus on faster growing areas and markets where it has a stronger presence.
"We are emphasising our core strengths and concentrating on those parts of the communications, storage and consumer electronics businesses where we have leadership," said LSI chairman and chief executive Wilfred Corrigan in a statement.
According to analysts, the company is cutting the parts of its business where it faces the toughest competition and the least return. But finding buyers for the businesses will not be easy, particularly in the DSL chip business.
"LSI only had a minority share of it. The established players will gain nothing from acquiring LSI's unit and it is not enough to tempt a new entrant. This is a very cost sensitive market," said Joseph Byrne, communications semiconductor analyst at Gartner Dataquest.
Alongside the job cuts and sell-offs, LSI also plans to restructure its manufacturing operations in Tsukuba, Japan. The company has already closed plants in Colorado and California.
LSI, which has long specialised in producing chips for wireless and data networking equipment, will take a charge of up to $70m this quarter related to the restructuring, but maintained that its plans would result in cuts to sales and operating expenses of about $30m per quarter. It also reiterated that it was on course to be profitable.
The company's announcement followed leading chipmaker Intel's announcement that it plans to cut capital spending in 2002 by 25 per cent.
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