SAN JOSE, Calif. -- Like other chip makers in Japan, Fujitsu Ltd.'s semiconductor unit is in trouble.
Fujitsu (Tokyo) has consolidated its fabs amid losses in its chip unit. For its 6-inch wafer processing facilities, three manufacturing lines will be consolidated into one line. For its 8-inch wafer processing facilities, four manufacturing lines will be consolidated into three lines.
Approximately 2,000 employees affected by the reorganization will be reassigned within the Fujitsu Group. In the fourth quarter of fiscal 2008 ending March 2009, the company expects to recognize a loss of approximately 10 billion yen ($111.2 million) related to facilities and equipment.
''With the rapid worsening of economic conditions worldwide, orders have decreased significantly since October 2008,'' according to Fujitsu. ''The company has therefore deemed it necessary to reorganize and consolidate its LSI wafer manufacturing facilities.''
The parent company said net sales in the nine-month period totaled 3.5 trillion yen ($38.546 billion), a decline of 7.9 percent compared to the same period in fiscal 2007. The company reported a net loss of 36.1 billion yen ($397 million) for the nine-month period, compared with a net loss of 3.8 billion yen ($42.3 million) in the same period of fiscal 2007, due to one-time charges and higher non-operating losses.
Net sales in its Device Solutions unit for the first nine months were 490.4 billion yen ($5.390 billion), a decrease of 18.4 percent compared to the first nine months of fiscal 2007. The segment posted an operating loss of 28.4 billion yen ($313 million) for the first nine months of fiscal 2008 as a result of the impact of lower sales and capacity utilization rates.
In the quarter, the Devices Solutions unit said sales were 91.9 billion yen ($1.01 billion), down 30.8 percent from the like period a year ago. The operating loss in the group was 21.1 billion yen ($234.6 million) in the quarter, compared to a profit of 9.4 billion yen ($104.5 million) a year ago.
Sales for LSI devices fell 25.4 percent in the quarter.
''Although sales of 65-nm logic devices increased, sales of 90-nm logic devices and standard logic devices declined. Demand is becoming increasingly weak, with sales declines of 13.5 percent, 22.4 percent and 30.8 percent recorded in the first, second and third quarters, respectively,'' according to Fujitsu.
"Our business operations remained profitable despite a harsh economic climate," said Fujitsu President Kuniaki Nozoe, in a statement. "We've proven that we can consistently generate profits in the IT services business, but overall we're not satisfied with the results. I'm confident that the measures we take in the coming months will put us in a better position to grow once the global economy turns the corner."
Fujitsu's projection for full-year net sales has been lowered by 350.0 billion yen (3.9 billion) to 4.7 trillion yen ($52.3 billion). The company now projects a full-year net loss of 20.0 billion yen ($222.4 million).