Anticipating falling revenues for its second fiscal quarter, Cirrus Logic Inc., Fremont, Calif., today said it will eliminate 70% of its fab capacity in a restructuring program that also calls for cutting 500 employees from the payroll.
With the move, Cirrus Logic takes a step back towards its roots as a fabless semiconductor company, by attempting to sell or renegotiate its stakes in two joint-venture chip-processing plants.
Cirrus holds stakes in two fabs. It owns 48% of MiCRUS, a partnership with IBM Corp. located in East Fishkill, N.Y., and 40% of Cirent Semiconductor, a joint venture with Lucent Technologies Inc., located in Orlando, Fla.
The company is trying to eliminate its less-profitable business units in order to focus on the more lucrative linear and mixed-signal product lines, said David French, recently appointed president and chief operating officer. He said Cirrus expects these remaining markets to outpace overall industry growth for the foreseeable future.
The Fremont chip supplier said it will take a charge in its second fiscal quarter of up to $500 million for the restructuring of its operations. Cirrus also said it is expecting flat to slightly down revenue for the period of $160 million to $170 million, compared to revenues of $177.9 million in the preceding quarter.
The company is now in discussions with IBM to restructure its participation in the MiCRUS joint venture, and it is looking to sell its entire share of Cirent to Lucent or a third-party investor. "As we now focus on fundamentals and capitalize on our core skills, we aim to drive a consistently profitable business model that will enable us to return to substantial shareholder value," French said.