MILPITAS, Calif. -- In its latest move to cut costs, LSI Logic Corp. late today announced it will take a $120-to-$150 million charge associated with the closure of an 8-inch wafer fab in Colorado Springs, Colo.
The fab closure, to take place in August, will affect 500 employees, or about 7% of its workforce. Many of these employees will be offered transfers and the balance will receive severance packages, according to LSI Logic officials.
The 8-inch, 0.35-micron fab was originally part of Symbios Inc., a supplier of storage chips. In 1998, LSI Logic acquired Symbios from Hyundai Electronics America.
LSI Logic's move to close the fab follows a recent shift in its manufacturing strategy. Earlier this month, the company said it plans to increase its foundry use to 20% of its processed wafers in 2001, from about 6-to-8% in 2000. Eventually, the company plans to outsource slightly more than 30% of its silicon from foundries (see April 5 story).
It also follows a major slowdown at the ASIC giant. Last month, LSI Logic reduced its first-quarter projections for the second time in recent weeks due to the sudden slowdown in the communications and storage chip markets.
At the time, the company also embarked on a series of measures to reduce costs. It has not implemented a hiring freeze, but will only "hire selectively," the company said.
Now, the company has shut down a fab--albeit an older plant. "This decision is precipitated by the weakening national economy, sharp decline in end-demand and the build-up of inventory in the supply chain," said Wilfred J. Corrigan, LSI Logic's chairman and chief executive.
"The mature technologies utilized by the Colorado Springs facility have been particularly impacted by the decline in the overall economy," he said. "We are consolidating our manufacturing capacity at our two major sites in Gresham, Oregon and Tsukuba, Japan."
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