SAN MATEO, Calif. Zuken USA has cut 16 workers or 40 percent of its sales and support staff and said it will reduce efforts to sell its CR5000 pc-board design product as part of a business restructuring.
The layoffs were reported by a source within the company and confirmed by a statement released Friday (Sept. 28). The source said Zuken had posted "dismal" pc-board tool sales in the United States over the last couple quarters.
Zuken said it "plans to pursue only selected sales" of its CR5000 product and consequently is letting go "unnecessary management layers," according to its released statement.
"Zuken will continue to market CR5000 licenses in the U.S., but only to existing customers and select corporate accounts," said the release. "The company plans to build CR5000 presence through a service business, better focused on customer service and support."
The internal source said Zuken had success selling CR5000 in Japan, where the company is based, but had failed to fork over the money necessary to market the product successfully in the United States. Before the layoffs, Zuken USA employed 40 workers, the source said.
In its release, the company said it has restructured its business into three units: CADstar, Visula and Advanced Packaging.
"We've known their business was tanking for some time," said Daya Nadamuni, EDA analyst at Gartner Dataquest (San Jose, Calif.). "In North America, they were in startup mode, and I guess they didn't get very far. As far as I can tell, this was their fourth attempt to get into the North American market." All of Zuken's announced North American design wins, she said, were in the packaging area.
In Japan, Brian Rolnick, manager of international corporate marketing at Zuken Inc. (Yokohama, Japan), suggested that the company was changing its focus toward advanced packaging but was determined to remain in the North American market.
The job cuts of "around 20 people" amounted to "only about 2 percent of our staff globally," he said.
Rolnick said that Zuken USA still has the necessary staff and support to service existing pc-board CAD tool customers. "We are in a business, and we need to make sure we can continue to support our customers and we need to make sure we maintain the profits to do that," he said.
Zuken USA will leverage its technical alliance with Amkor Technology Inc. to provide advanced packaging solutions, Rolnick said. "From what we have seen of the packaging business, with our technology and our capabilities we can really make inroads in the U.S. market," he said.
"We would be the first to acknowledge that the U.S. market is a tough one to crack, but we are not giving up," he said.
Zuken was the world's third-largest pc-board CAD vendor in 2000, with $71.9 million in revenue and a 16.9 percent market share, said Nadamuni of Dataquest. The vast majority of those revenues came from Japan. In North America, Nadamuni said, Zuken's revenues were down 50 percent in 2000 to $3 million, a paltry 1.5 percent market share. Similarly, Nadamuni said, Zuken's European revenues were down 46 percent in 2000, where the company held an 8.6 percent market share. These Dataquest figures include both layout tools and packaging.
Only Zuken's strength in Japan allowed the company to post a modest 1.2 percent growth in pc-board CAD revenue in 2000. Zuken held a 50 percent market share in Japan last year, where it realized 16.4 percent growth. The worldwide pc-board CAD market grew 17.5 percent from 1999 to 2000, Dataquest said.
With additional reporting by Paul Kallender in Tokyo.