Will the semiconductor industry set off a new wave of layoffs? Recently, AMD and Spansion have announced layoffs in succession, which has caused employees in this field to fall into fear. AMD announced that it will lay off 10% of its staff, about 1,400 people; NOR flash memory supplier Spansion (it was once part of AMD) said it would lay off 750 people, a rate of about 20%.
These moves have led many people to question--with a certain degree of unease--whether we have entered a period of depression in the semiconductor industry that pervades fear and herd mentality, leading many companies to lay off workers.
Looking back on the dark days from the end of 2008 to the beginning of 2009, it was often the case that more than one chip company announced layoffs at the time and many people lost their jobs; some companies even implemented several rounds of layoffs because of the steep decline in the economy. This time, it seems that there are reasonable reasons for people to expect that the situation will be different from the last time.
First, public opinion is almost unanimous that the current small-scale bumps faced by the semiconductor industry are nothing compared with the financial turmoil of the 2008/2009/global depression; some analysts, including Christopher of JP Morgan Danely believes that this time the boom period has bottomed out, and the semiconductor industry has started to go uphill.
"I don't think there will be large-scale layoffs like AMD," said Bill McClean, president of IC Insights, a market research firm. "We have recently seen companies from TSMC, ST, Microchip and UMC. The quotation of the company has seen that the bottom line of sales performance has been formed and the inventory adjustment is nearing its end. If the situation does not get worse, I think that companies will actively seize the opportunity to see how this year will progress."
The senior executive of TSMC’s European market said not long ago that the company has seen a recovery in performance; the CEO of ST’s Carlo Bozotti also said in an interview with the media that the status of the wafer order seems to have bottomed out.
To interpret the layoffs of AMD and Spansion from an optimistic perspective, these should be only strategic considerations for individual companies and do not mean that other companies will follow suit. Among them, AMD is making great changes as the new CEO assumes office. Therefore, it will undoubtedly announce how the company will conduct cost control to achieve its goal.
In-Stat analyst Jim McGregor described it as a "cleaning up" that the company has been delaying in recruiting new employees for too long in the past year and is just the right move for AMD's new CEO, Rory Read.
However, looking at AMD’s layoffs from a cynical perspective, what the company has done is a reckless move that many companies have also done. This often “solves†many American engineers and allows engineers from emerging countries to have an opportunity to surface. AMD said that 50% of its layoffs are in North America; anonymous sources point out that the company has implemented layoffs in certain regions in order to hire new engineers and team members in some markets that have relatively large growth opportunities.
It's like the company is cruel to say: "We need fewer American engineers, but we need more engineers in India and China."
Spansion's layoffs are very simple and easy to understand. Most of the company's layoffs (610 out of 750 people) are for the consolidation of its packaging and testing units and are concentrated at a single point outside Bangkok to save cash. However, the timing of Spansion’s announcement of layoffs is ironic. Although the recent flooding in Thailand did not affect the company’s local positions, this strategy clearly underestimates the “spread risk†value of maintaining multi-site production activities.
What if your production site is shut down due to a natural disaster but there are no other production sites that can support it? It would seem reasonable to consolidate the production line to a single site and save about $30 million a year. However, if it is shut down due to natural disasters or human factors, it will not be the case. How do you ship this time?
In response to these questions, the Spansion spokesman answered that the company’s production strategy will use both internal and external (representative and third-party partners) resources; it indicates that while integrating the internal packaging testing capacity into Bangkok, Continuous use of external resources such as Amkor, ChipMos and UTL partners to achieve flexibility in capacity scheduling.
These moves have led many people to question--with a certain degree of unease--whether we have entered a period of depression in the semiconductor industry that pervades fear and herd mentality, leading many companies to lay off workers.
Looking back on the dark days from the end of 2008 to the beginning of 2009, it was often the case that more than one chip company announced layoffs at the time and many people lost their jobs; some companies even implemented several rounds of layoffs because of the steep decline in the economy. This time, it seems that there are reasonable reasons for people to expect that the situation will be different from the last time.
First, public opinion is almost unanimous that the current small-scale bumps faced by the semiconductor industry are nothing compared with the financial turmoil of the 2008/2009/global depression; some analysts, including Christopher of JP Morgan Danely believes that this time the boom period has bottomed out, and the semiconductor industry has started to go uphill.
"I don't think there will be large-scale layoffs like AMD," said Bill McClean, president of IC Insights, a market research firm. "We have recently seen companies from TSMC, ST, Microchip and UMC. The quotation of the company has seen that the bottom line of sales performance has been formed and the inventory adjustment is nearing its end. If the situation does not get worse, I think that companies will actively seize the opportunity to see how this year will progress."
The senior executive of TSMC’s European market said not long ago that the company has seen a recovery in performance; the CEO of ST’s Carlo Bozotti also said in an interview with the media that the status of the wafer order seems to have bottomed out.
To interpret the layoffs of AMD and Spansion from an optimistic perspective, these should be only strategic considerations for individual companies and do not mean that other companies will follow suit. Among them, AMD is making great changes as the new CEO assumes office. Therefore, it will undoubtedly announce how the company will conduct cost control to achieve its goal.
In-Stat analyst Jim McGregor described it as a "cleaning up" that the company has been delaying in recruiting new employees for too long in the past year and is just the right move for AMD's new CEO, Rory Read.
However, looking at AMD’s layoffs from a cynical perspective, what the company has done is a reckless move that many companies have also done. This often “solves†many American engineers and allows engineers from emerging countries to have an opportunity to surface. AMD said that 50% of its layoffs are in North America; anonymous sources point out that the company has implemented layoffs in certain regions in order to hire new engineers and team members in some markets that have relatively large growth opportunities.
It's like the company is cruel to say: "We need fewer American engineers, but we need more engineers in India and China."
Spansion's layoffs are very simple and easy to understand. Most of the company's layoffs (610 out of 750 people) are for the consolidation of its packaging and testing units and are concentrated at a single point outside Bangkok to save cash. However, the timing of Spansion’s announcement of layoffs is ironic. Although the recent flooding in Thailand did not affect the company’s local positions, this strategy clearly underestimates the “spread risk†value of maintaining multi-site production activities.
What if your production site is shut down due to a natural disaster but there are no other production sites that can support it? It would seem reasonable to consolidate the production line to a single site and save about $30 million a year. However, if it is shut down due to natural disasters or human factors, it will not be the case. How do you ship this time?
In response to these questions, the Spansion spokesman answered that the company’s production strategy will use both internal and external (representative and third-party partners) resources; it indicates that while integrating the internal packaging testing capacity into Bangkok, Continuous use of external resources such as Amkor, ChipMos and UTL partners to achieve flexibility in capacity scheduling.
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