By Jeff Karoub
Small Times Staff Writer

July 13, 2001 — Corning Inc., which announced this week that it would cut 1,000 jobs and close three plants, joins the list of those jolted by the economic slowdown. But the world’s largest fiber-optic cable maker is following another trend, too: Protecting small tech workers and funding from the cuts.

Small tech programs are being spared at companies nationwide, analysts say, because this research will be a key part of future products. And the field is young enough that most companies have relatively small portions of their budgets dedicated to MEMS, microsystems and nanotechnology work.

“For now, there has been no impact on MEMS,” said Paul Rogoski, a Corning spokesman. “We are committed to the technology and we’re going to pursue it for sure.”

The cooling economy has resulted in announcements during the past six months that more than 770,000 jobs would be cut by U.S. companies. That’s 27 percent higher than reported layoffs in all of 2000, by one tracking firm’s estimate.

Consumer products from MEMS research and development should be ready to hit the market by early 2002 — about the time the U.S. economy is expected to recover, one analyst said.

“MEMS is really well-positioned,” said Marlene Bourne, a MEMS analyst for Cahners In-Stat Group.

“In a way, it’s good timing. Obviously if the market had emerged last year and most companies were in production (on MEMS devices), they’d be doomed.”

“There’s nothing to buy yet, so in that way they have protected status. When market turnaround does occur, that’s when the majority of MEMS companies will be in small-volume production.”

In the meantime, however, they are surrounded by profit warnings and layoffs — by their parent companies, or, in the case of MEMS start-ups, their biggest customers.

Overall, job-cut announcements by U.S. companies rose 56 percent in June, to nearly 125,000. That’s up from 80,140 in May, bringing the six-month total to more than 770,000, according to Challenger, Gray & Christmas, a Chicago-based outplacement firm that tracks job-cut news daily.

The latest report, released July 5, found the telecommunications industry led other business sectors, with 27,446 cuts in June, bringing its six-month total to 130,442. The computer industry reported 74,723 job cuts during the same period, while electronics reported 59,181.

Agere Systems, an Allentown, Pa.-based maker of MEMS-based optical switches, announced last month it would lay off 4,000 people, or 25 percent of its workforce. That followed an announced cut of 2,000 additional workers in April.

A spokesman for the company, formerly the Microelectronics Group of Lucent Technologies, said Thursday it’s too early to tell where the cuts will be, but the company recently launched two MEMS-enabled systems, a high-voltage, multichannel amplifier chip, and an optical switching component. Both should be commercially available later this year.

“Those two announcements show we consider MEMS to be an important technology going forward,” said Carl Blesch of Agere.

JDS Uniphase Corp., based in San Jose, Calif., said last month it plans more layoffs, following the announced 8,000 job cuts earlier this year. Company officials could not be reached for comment, but it recently bought Cronos Integrated Microsystems Inc., which designs and builds optical MEMS devices.

Corning’s Rogoski said MEMS has not been affected by its layoffs, but he said all positions are under review. For competitive reasons, he would not reveal the number of MEMS jobs the New York-based company has.

“The market has not really fully matured in (MEMS), so when you’re not making and selling a lot of product, you’re not impacted when people stop buying,” he said.

“It’s certainly a well-grounded technology that we’re very interested in and pursuing, but they don’t run the kind of numbers … like amplifiers, couplers and photonic components.”

Corning’s experience helps to understand why small tech has been spared, according to Bourne. While it would be nice to think that MEMS has withstood market forces because of its potential to change the world, it has more to do with the status of the nascent industry.

“MEMS as a whole has been commercialized for 10 years — it’s not affected by the same peaks and valleys as the semiconductor industry,” she said. “It’s still primarily a research-driven industry, so it’s not being affected by the greater market movement.”

Further, most MEMS research and development tends to fall within the walls of small, start-up concerns, she said. When it is done at corporations, it tends to get swallowed up in multibillion-dollar budgets.

“It’s a drop in the bucket,” Bourne said. “You would think that would make it iffy, but companies need to keep their fingers on next-generation technologies.

“It would be ridiculous for them (to cut MEMS). The market is not so bad that they need to slash future research, at least at this point.”

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CONTACT THE AUTHOR:
Jeff Karoub at [email protected] or call 734-994-1106.