Conexant further reduces workforce, announces restructuring initiatives

July 9, 2001 – Newport Beach, CA – Conexant Systems has announced additional restructuring and expense-reduction initiatives, including a reduction in workforce of approximately 450 people. Also, the company has developed a strategic manufacturing realignment program aimed at accelerating the company’s transition to a fabless CMOS business model. The additional measures are necessary to further rationalize Conexant’s operations with current and anticipated revenue levels and position the company for a return to profitable growth, the company said.

Conexant will downsize manufacturing operations, temporarily shutdown its wafer fabrication plants, and reduce workweeks for employees at the company’s assembly and test facility. Non-manufacturing expense reductions will be achieved mostly through headcount reductions, primarily in support functions. The company said its restructuring and expense-reduction initiatives, which are in addition to those announced in March, will result in one-time charges in the company’s third and fourth fiscal quarters.

The workforce reduction will occur over the next 30 days, and affect approximately 420 full-time employees and 30 contractors worldwide, for a total reduction of approximately 6% of Conexant’s employees. Combined with reductions announced in March, the company’s reductions now total an overall headcount reduction of approximately 25% when the actions are complete.

Temporary plant shutdowns totaling two weeks during the September-ending fourth fiscal quarter will occur at the company’s wafer fabrication facilities in Newport Beach and Newbury Park. Employees at the company’s Mexicali, Mexico, assembly and test facility will take off one day per week without pay through the end of the fourth fiscal quarter. Product shipments to customers will not be effected by these cost-saving activities, Conexant said.

Additionally, the company said it is shifting away from volume digital CMOS manufacturing and accelerating its move toward a fully fabless CMOS business model. Conexant will now discontinue advanced CMOS process technology development efforts beyond the company’s current 0.13-micron capability, as well as further investments in CMOS manufacturing capacity. As part of this strategic realignment, Conexant expects to take a one-time manufacturing asset write-down in its June-ending third fiscal quarter.

Conexant is in discussions with several current CMOS foundry partners and expects to announce a broadened, long-term supply agreement covering the majority of its future CMOS wafer requirements.

Specialty-process manufacturing will remain an important component of Conexant’s business strategy. The company is resizing its Newport Beach wafer fabrication facility to match only its expected specialty-process demand, which will be increasingly concentrated on silicon germanium process technology.

The company will also continue to operate and invest in next-generation technology at its gallium arsenide (GaAs) wafer manufacturing facility in Newbury Park, CA.


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