Semi Conscious
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elwood
There are longer term trends in this industry, for sure. But the semiconductor ...
tb1
I remember seeing an ad once that asked for 5yrs experience with a type of ...
Has the layoff wave begun?
Dylan McGrath
11/10/2011 2:09 PM EST
Fears about a wave of successive layoffs by semiconductor firms were stoked last week when two chip makers gave out walking papers.
AMD announced it would cut about 10 percent of its workforce, roughly 1,400 jobs. Spansion—the NOR flash memory vendor that, ironically, was once an AMD subsidiary—said it would ax about 750 jobs, or around 20 percent of its workforce.
These actions have led many people to question—with some trepidation—whether we have entered that period in a semiconductor industry down cycle when fear and the herd mentality both set in, leading to layoffs at many firms.
Recall that in the dark days of late 2008 and early 2009, it seemed as though not a day went by when we didn't learn of plans by at least one but often several chip companies to cut back, putting more people out of work. Some companies enacted multiple rounds of layoffs, owing to the steepness of the downturn.
There seems legitimate reason to hope that things will be different this time around. For one thing, opinion is near universal that the bump in the road the semiconductor industry has been in for the past few months is a pimple on a dog's behind compared to the financial crisis/global recession Armageddon of 2008/2009. Some analysts, including Christopher Danely of JP Morgan, believe that this downturn has already bottomed out and that the semiconductor industry is in the early stages of an upturn.
"I don't think there will be a lot more layoffs like at AMD," said Bill McClean, president of market research firm IC Insights. "We have recently seen quotes from TSMC, ST, Microchip, and UMC that sales appear to be forming a bottom and inventory adjustment is almost over. If things do not get a lot worse, I believe companies will hold tight to see how next year progresses."
TSMC's top European executive said last week that the foundry giant was starting to see a positive turnaround in business. Carlo Bozotti, STMicroelectronics CEO, was quoted in a Marketwatch report saying that chip orders had likely reached the bottom for the cycle.
The glass half full read on the AMD and Spansion layoffs is that they were very company specific actions that aren't likely to translate into layoffs at other firms. AMD, of course, is in the midst of some pretty serious transformation and has a new CEO who no doubt was interested in making a statement about where the company is headed and how it would control costs to get it there. In-Stat analyst Jim McGregor chalked it up to a long-overdue house-cleaning at a company that continued hiring all last year, put in place like a stamp by new CEO Rory Read.
Of course, the cynical read on the AMD layoff is that AMD is doing in a very bold-faced way what many companies have been doing, often more subtly, for years—clearing the decks of U.S. engineers in order to make room for new ones in emerging economies. The company said 50 percent of the cuts would come in North America; an anonymous sources at the company said AMD would be making cuts in some areas in order to hire engineers and staff in areas of larger growth opportunity. That sounds an awful lot like corporate speak for "We want fewer engineers in the U.S. and more in China and India."
Spansion's layoff was pretty straightforward. The bulk of the job cuts at Spansion (610 out of 750) will come from the closure of the company's test and assembly facility in Kuala Lumpur. Spansion is consolidating all of its test and assembly activities to one facility outside of Bangkok in order to save some cash.
But the timing of Spansion's announcement is ironic to say the least. Though the rampant flooding in Thailand in recent months has not effected Spansion's operation there, it has certainly underscored the value of maintaining manufacturing activities in multiple locations. ON Semiconductor, among other firms, has been forced to endure the closure of two of its facilities in Thailand and expects that to impact it's top line revenue by about $60 million in the fourth quarter. ON Semi and others say they are re-routing products to other facilities for test and assembly in order to lessen the impact on customers and availability of product.
But what if you don't have another facility to re-route product to? From a cost-analysis point of view, onsolidating test and assembly operations in one site to save about $30 million on an annualized basis might seem a shrewd cost-cutting move, until your single consolidated test and assembly operation is hit by a natural or man-made disaster and forced to shut down. Then where do you send your product? (For the record, we certainly hope that Spansion is never faced with this prospect, but we've had plenty of examples this year to remind us that these things do happen.)
Asked these questions, a spokesman for Spansion said the company's manufacturing strategy makes use of both internal assets (internal fabs and the Bangkok test and assembly facility) and external resources (foundries and third-party SATS providers).
"As we shift our internal test and assembly capacity to Bangkok, we continue to use external partners, such as Amkor, ChipMos and UTL to supplement our internal operations and provide additional, flexible capacity," the spokesman said. "We don’t anticipate any additional risk from this consolidation activity."
AMD announced it would cut about 10 percent of its workforce, roughly 1,400 jobs. Spansion—the NOR flash memory vendor that, ironically, was once an AMD subsidiary—said it would ax about 750 jobs, or around 20 percent of its workforce.
These actions have led many people to question—with some trepidation—whether we have entered that period in a semiconductor industry down cycle when fear and the herd mentality both set in, leading to layoffs at many firms.
Recall that in the dark days of late 2008 and early 2009, it seemed as though not a day went by when we didn't learn of plans by at least one but often several chip companies to cut back, putting more people out of work. Some companies enacted multiple rounds of layoffs, owing to the steepness of the downturn.
There seems legitimate reason to hope that things will be different this time around. For one thing, opinion is near universal that the bump in the road the semiconductor industry has been in for the past few months is a pimple on a dog's behind compared to the financial crisis/global recession Armageddon of 2008/2009. Some analysts, including Christopher Danely of JP Morgan, believe that this downturn has already bottomed out and that the semiconductor industry is in the early stages of an upturn.
"I don't think there will be a lot more layoffs like at AMD," said Bill McClean, president of market research firm IC Insights. "We have recently seen quotes from TSMC, ST, Microchip, and UMC that sales appear to be forming a bottom and inventory adjustment is almost over. If things do not get a lot worse, I believe companies will hold tight to see how next year progresses."
TSMC's top European executive said last week that the foundry giant was starting to see a positive turnaround in business. Carlo Bozotti, STMicroelectronics CEO, was quoted in a Marketwatch report saying that chip orders had likely reached the bottom for the cycle.
The glass half full read on the AMD and Spansion layoffs is that they were very company specific actions that aren't likely to translate into layoffs at other firms. AMD, of course, is in the midst of some pretty serious transformation and has a new CEO who no doubt was interested in making a statement about where the company is headed and how it would control costs to get it there. In-Stat analyst Jim McGregor chalked it up to a long-overdue house-cleaning at a company that continued hiring all last year, put in place like a stamp by new CEO Rory Read.
Of course, the cynical read on the AMD layoff is that AMD is doing in a very bold-faced way what many companies have been doing, often more subtly, for years—clearing the decks of U.S. engineers in order to make room for new ones in emerging economies. The company said 50 percent of the cuts would come in North America; an anonymous sources at the company said AMD would be making cuts in some areas in order to hire engineers and staff in areas of larger growth opportunity. That sounds an awful lot like corporate speak for "We want fewer engineers in the U.S. and more in China and India."
Spansion's layoff was pretty straightforward. The bulk of the job cuts at Spansion (610 out of 750) will come from the closure of the company's test and assembly facility in Kuala Lumpur. Spansion is consolidating all of its test and assembly activities to one facility outside of Bangkok in order to save some cash.
But the timing of Spansion's announcement is ironic to say the least. Though the rampant flooding in Thailand in recent months has not effected Spansion's operation there, it has certainly underscored the value of maintaining manufacturing activities in multiple locations. ON Semiconductor, among other firms, has been forced to endure the closure of two of its facilities in Thailand and expects that to impact it's top line revenue by about $60 million in the fourth quarter. ON Semi and others say they are re-routing products to other facilities for test and assembly in order to lessen the impact on customers and availability of product.
But what if you don't have another facility to re-route product to? From a cost-analysis point of view, onsolidating test and assembly operations in one site to save about $30 million on an annualized basis might seem a shrewd cost-cutting move, until your single consolidated test and assembly operation is hit by a natural or man-made disaster and forced to shut down. Then where do you send your product? (For the record, we certainly hope that Spansion is never faced with this prospect, but we've had plenty of examples this year to remind us that these things do happen.)
Asked these questions, a spokesman for Spansion said the company's manufacturing strategy makes use of both internal assets (internal fabs and the Bangkok test and assembly facility) and external resources (foundries and third-party SATS providers).
"As we shift our internal test and assembly capacity to Bangkok, we continue to use external partners, such as Amkor, ChipMos and UTL to supplement our internal operations and provide additional, flexible capacity," the spokesman said. "We don’t anticipate any additional risk from this consolidation activity."
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Robotics Developer
11/10/2011 3:34 PM EST
I wonder sometimes about company strategic planning? It was not too long ago (best not to say but less than 6 months) I was interviewing at AMD. I am glad it was not a good fit!!!! Something just doesn't make sense, massive hiring while looking for a CEO is one of those things. Maybe I just don't (and can't) see the big picture.
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goafrit
11/10/2011 5:41 PM EST
It is total fear. This is exactly what Fuller has in EELIFE. We are destroying families.
http://www.eetimes.com/electronics-blogs/pop-blog/4230516/Our-own-planned-obsolescence
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Sheetal.Pandey
11/11/2011 2:41 AM EST
Oh yes 2008 was financial situation was really bad. I was just chatting with someone who was in Boston that time, even for a dollar CEO's approval was required.
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Dark Mage Software
11/11/2011 1:27 PM EST
Okay, so, let's get this economic strategy straight. "We want more engineers in China and India and less in the United States." Okay. So, one would assume that most of their products are sold in China and India and fewer are sold in the United States, right? No? Well, at least the Chinese and Indian people buy from their American customers, right? No? Then forgive me for this, but how exactly is this helping the company? Sure, they save a few hundred thousand dollars today - maybe even a million or two - but sooner or later the lost sales have to manifest in lost revenues. Basically, by exporting the jobs, you are flushing the cash down the toilet. Actually, it's more like setting it on fire. You can heat your home for a few hours with the flames, and maybe cook a meal or two, but then what? In the end, you have no money, no heat, and no light. I can hardly wait until the boards of directors at these companies wake up and ask "hey, wait. We have moved manufacturing overseas. We have moved IT overseas. We have moved engineering overseas. Why do we need American CEOs again?"
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Dr DSP
11/11/2011 3:04 PM EST
So- would you recommend to a high school gradualte that they go on to get an engineering degree? It was a no brainer maybe 30 years ago, but now? I don't think so...
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KB3001
11/17/2011 9:04 AM EST
The answer is no, sadly.
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trmb
11/22/2011 12:22 PM EST
'Fraid not. I'd recommend a medical field because of the employment opportunities and job security.
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BobsUrUncle
11/11/2011 8:04 PM EST
This country is on the way down fast. The gutting of the middle class will cause an economic stagnation the likes of which we haven't seen since the 70s.
If all these corporations are hoarding cash why aren't they hiring. Don't give me that republican "uncertainty" BS. It's lack of leadership in government.
We need to change the tax laws to favor American workers. Tax the corporations that sell goods and services in the US and provide a tax credit for hiring American workers. The effect will be to suck those jobs back to America where they belong. Every American worker should push this proposal in every social network. Build a grass roots movement.
Support #OWS. Wall Street greed has destoryed our lives like no terrorist ever could.
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Sanjib.Acharya
11/12/2011 2:04 AM EST
Just like any great technological breakthrough, there is a need of a big "Managerial Breakthrough"...kind of a revolution in leadership styles. Why can't there be any other solutions? Laying of people in the old fashion way is just a temporary solution which is readily available in the leaders' hand with out the need of having to stress their brains in finding a long term solution which could be win-win for both the employers and the employees. I think the first thing which should be avoided is reacting on panic. The second should be develop a long term perspective by the leadership, board of directors. Third could be developing a strong financial team that has a long term vision to take care of this economic ups and downs...just trying to think revolutionary, it might sound stupid...beg your Purdon..I'm just a technical person.
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texdave
11/22/2011 9:26 AM EST
Yes, it would be nice if the world was a simple as you describe. However, nothing that is worthwhile is easy. Don't be willing to give up freedom for security because you will end up with neither.
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Bill Teasley
11/14/2011 7:48 PM EST
Engineering is still one of the better paying professions. America has to maintain a worker visa program for engineers because we don't train enough in the U.S. anymore. No job comes with a guarantee of employment.
We should recommend engineering to young adults today. We should also insist on a tax code that doesn't encourage shipping our jobs off shore. Finally we should all take responsibility for what has happened to American engineering, manufacturing and jobs in general. We can all be more vocal about offshoring in our voting and even at work. It's easy to blame a top manager, but when was the last time you told them they were wrong? Speak your mind in venues where it makes a real difference.
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KB3001
11/17/2011 9:11 AM EST
Unless people are prepared to move, perhaps internationally, I am not sure you could encourage engineering as a career, hand-on-heart. Kids can still do an Engineering degree but they would probably be better off doing something else afterwards if they want to stay closer to home.
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selinz
11/14/2011 9:10 PM EST
Well I have always liked supporting the "little guys" but if AMD is going to ship most of the engineering jobs oversees, this engineer is going to reevaluate.
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HVREDDY
11/15/2011 12:51 PM EST
I would still recommend the engineering profession for the young... Otherwise we will only have a service economy - bunch of MBA's selling/trading junk they don't even understand. We need to get the CEO pay etc to be in par with those in Germany or Japan. We need to reward managers who think long term and not short term.... We need to impose fine on Corporations that setup shell companies offshore to hide profits (start to delist them). Then you will see the manufacturing coming back .. Last but not least fix the university education so that science and engineering graduates stay and complete the programs.. Take a lesson from UMBC....
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Frank Eory
11/22/2011 12:34 PM EST
I have a daughter studying engineering right now, and I would never dream of discouraging her. The U.S. actually DOES still design and manufacture things -- lots of things. If for some reason that becomes less true in the future, and there truly are few engineering opportunities in the U.S., I think she is quite prepared to move overseas. It's not as if engineering is a dying profession worldwide.
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daleste
11/15/2011 9:27 PM EST
You left out the 350 that TI is letting go. The article in the paper said that most will be from the National employees.
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dylan.mcgrath
11/15/2011 10:16 PM EST
You are correct daleste. Somehow I missed this late last week.
http://www.dallasnews.com/business/headlines/20111111-texas-instruments-to-cut-about-350-national-semiconductor-jobs.ece
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dylan.mcgrath
11/15/2011 10:19 PM EST
PS- How does the TI layoff fit in with our thesis? Well, I'd say it's another company-specific action that doesn't necessarily mean more layoffs at other firms. It's an ugly fact that when two companies the size of TI and National get together, there are bound to be some "redundancies" and job cuts. We'll see if what we can find out if engineering jobs are involved.
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zeeglen
11/15/2011 11:36 PM EST
Looks at TI hiring postings - "recent college graduate" - in other words, old fogies need not apply.
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daleste
11/16/2011 10:13 PM EST
This is very true. I was told by a manager that he can only hire up to 5 yrs experience because their group is "top heavy".
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dylan.mcgrath
11/16/2011 1:57 PM EST
Just an update on this, for the record. I spoke with a TI spokeswoman. She reminded me that TI said at the time the National acquisition was announced that there would be some jobs cut as the companies merged. The total number is about 350, mostly in support functions in areas such as HR and legal. No engineers or salespeople are being let go, she said.
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masher
11/17/2011 3:24 PM EST
My great grandfather was a Mortician and from what I hear very busy year round. I should have followed in his steps instead of going into RF engineering, at least I'd have a steady flow of cutomers especially after all the failed execs jump off the roof.
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prabhakar_deosthali
11/18/2011 12:24 AM EST
I have seen the "culture of layoff" only in US companies. In India Layoff is the last thing a company will resort to in difficult times as the Indian companies believe that the real strength of the company lies in their people. These Indian companies will freeze pays, stop new hiring, sometimes impose pay cuts on senior and middle management but will not lay off. This helps the companies to survive in the long term
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kumaranmani
11/20/2011 7:11 PM EST
I am not sure what industry you are referring to. Intel, TI, Cypress Semi, Wipro to name a few have in the past laid off workers in India.
Also, labor laws are very different in India and layoff is not an option in most industries.
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Anonymouse1234567891011121314151617181920
11/22/2011 9:17 AM EST
This is just like when I hear about engineering jobs that are going unfilled. Total bull, the "unfilled" jobs are either just agencies resume mining or the job description looks something like this.
PhD level electrical engineer needed to design, develop, and support product X. Must have 5 plus years in FPGA development, experience with FPGA company X required. Must have schematic entry and PCB design experience with software package X. Must be able to design, develop and support related injection molding software using Autodesk Inventor 2012. For the lighting aspect of the product the engineer must be familiar with ray tracing program X. Must have experience developing optics.
Must be a dynamic team player (insert a whole bunch of overused HR "keyword fluff here").
International travel of up to 50% required. Fluent Mandrain required.
Okay so now as silly as that might sound? There are jobs out there where they expect all that and if you don't have one thing (say a masters but not a PhD) or you know Inventor 2010 but not 2012, then you are not a "good fit" and they keep looking. When they do find that golden candidate that fits all that? They are surprised he isn't willing to work for $12 an hour in California...
Idiots, the HR field now? I swear the "professional" agencies that try to recruit talent are staffed by 20 something's who spend most of their time on facebook and let their software sift for key words. I am quite certain I could put Xilinx FPGA experience in a resume and on that same resume list one of my previous jobs as "axe murderer" and I would still get contacted about job openings. There is nothing more frustrating than these recruiters not even bothering to read a resume before contacting you.
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Frank Eory
11/22/2011 12:42 PM EST
Sad, but funny and also true. I recently read somewhere that by the time you get to the interview stage, the person doing the interview will most likely have not read more than the first 1/3 of your resume. The presumption is that you meet all the technical requirements, otherwise the keyword search algorithm would've rejected you long before the interview stage.
I can just imagine the following resume, which might be quite effective with the keyword matching programs:
FPGA Xilinx Altera Actel ASIC SoC Verilog VHDL Abel Synopsys Cadence Mentor Axe Murderer C C++ Java J++ Perl Tkl HTML Embedded Systems...
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dft00
11/22/2011 2:21 PM EST
Your job ad looks like an H1B visa fulfillment ad. I do not know if that is true in this case, but it was a common practice in the past to write a job ad that only your H1B visa candidate can match. The company has fulfilled the US government requirement to advertise the opening, and yet only your candidate matches all the requirements in the ad.
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texdave
11/22/2011 9:34 AM EST
Reading all this gloom and doom does remind me of the 70's. It is interesting that it corresponds to similar gov't styles. Remember that things turned around in the 80's and we were all positive and growing again. Innovation and risk taking can turn things around. Reject political correctness and go for the gold, take risks and be innovative.
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dnelson1d
11/22/2011 9:44 AM EST
Hi Dylan, interesting article - I enjoyed it. I just wanted to pick a nit though. An enduring pet peeve of mine is the modern misunderstanding of what "irony" is. Dylan, I was willing to let one usage go, but you used it twice in this article, so I felt I had to comment. Please go look it up, and don't use it again unless something is truly ironic. Best regards.
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Duane Benson
11/22/2011 1:27 PM EST
Perhaps some of the unfilled jobs are due to semi-scam practices, but I spent months trying to hire a decent software developer. I don't have silly-hard requirements either. I was just looking for someone with a good track record and experiences in something close to our development environment. We were willing to and did hire folks that needed training in some of the areas. It was astoundingly difficult to even find candidates to interview.
As far as career recommendations to high schoolers, I would not recommend that someone plan their future based on what happened last year and is happening this year. Industries go up and down and engineering will go back up again.
Even if it is still difficult to get engineering jobs a half decade from now, that engineering degree contains more flexibility in career choice than just about any other degree. Engineers can go just about anywhere. Not a lot of majors can say that.
If the technical industry in this country completely collapses, then who, but engineers can pick up the pieces and rebuild it?
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tb1
11/22/2011 5:25 PM EST
I remember seeing an ad once that asked for 5yrs experience with a type of computer system that had only existed for 3 years.
The end result would be that everyone they bring in for an interview is a liar.
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elwood
11/22/2011 6:24 PM EST
There are longer term trends in this industry, for sure. But the semiconductor cycle of ups and downs is real and has been measured. These layoffs are in line with that cycle, IMHO, and certainly the low performing companies are first to crack. http://bit.ly/sG1ofR
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