National Semiconductor is getting out of the PC processor business, as predicted, but not quite in the way everyone had anticipated.
Instead of selling off its Cyrix subsidiary, NatSemi will sell off its majority interest in its South Portland, Maine 0.18 micron fabrication plant and make many of its x86 processor employees redundant.
Some 550 jobs will go, through a mix of early retirements, layoffs and not replacing staff who join other companies. That figure, the company said today, will include 165 jobs cuts being made at NatSemi's Singapore facility, announced last month.
NatSemi said the job cuts represent less than five per cent of its total headcount.
Meanwhile, the company will focus its CPU development efforts on the emerging information appliance market.
NatSemi chief executive, president and chairman, Brian Halla, has been rattling on about information appliances for some time - he made it the subject of his keynote at last autumn's Microprocessor Forum, for instance - and the demand it has for very low cost, integrated, processors. And integrated processors are, of course, what Cyrix is all about.
So, moving toward the information appliance market was been a part of NatSemi's strategy for some time and presumably Jalapeno now feels it's time to kick away the support of sales to low end PC manufacturers and target appliance vendors exclusively. It also leaves it free of the ongoing Slots and Sockets arguments - now it does not need to support either.
The company said it will continue to develop its integrated processor line, including its MediaGX processor, suggesting its recently revealed roadmap still holds true. After all, what we're talking about here is a business shift rather than a technology one.
NatSemi said it will take a $250 million to $300 million hit in its fourth quarter, which ends on 30 May, to cover the layoffs. The balancing effect of the South Portland plant sale is uncertain since NatSemi is still talking to potential buyers.
More long term, the company said it didn't expect sales of processors to information appliance vendors - and its parallel sharpening of its focus on analog devices - to counter the loss of sales to PC vendors until next year. It then expects to see margin percentages return to the mid 40s and growth to return to double figures.
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