Toshiba to cut about 20,000 jobs; mulls memory merger with Infineon

Aug. 27, 2001 – Tokyo, Japan – Toshiba Corp. is considering plans to merge its memory chip business with Germany-based Infineon Technologies as part of a global restructuring that includes cutting about 20,000 jobs from the Japanese company’s work force of 188,000 by FY03.

Infineon is the world’s fourth-largest DRAM maker, and Toshiba the sixth-largest, according to Gartner Dataquest Inc.

The merger discussions come as all the large Japanese computer and chipmakers are affected by the worldwide economic slowdown and long-term erosion of profit in nearly all major product areas. NEC Corp. and Fujitsu Ltd., Japan’s largest computer maker, each announced layoffs this month. Japanese published reports said that Hitachi Ltd. is expected to cut 20,000 workers. Hitachi couldn’t be reached for comment.

In addition to the cuts at Toshiba, the company announced in its “01 Action Plan” that it will promote job shifts by 10,000 employees within the group in Japan by the end of FY03. The company said it will promote a limited term program to assist people who voluntarily retire in the second half of this fiscal year.

Toshiba plans to restructure its headquarters function in October 2001 will reduce the headcount by 10% and achieve a corporate staff of 290 people by the end of FY2001. The company will establish two new headquarters organizations this year to promote group unity: the procurement promotion division in October and the Internet-ready promotion division in September.

In addition to the 350 billion yen reduction in assets announced in the mid-term business plan, Toshiba will reduce assets by another 450 billion, to achieve a total reduction of 800 billion yen. One hundred billion yen of the additional 450 billion yen in cuts will be made in FY2001.

Toshiba said its underlying objective is to achieve a robust organization that can quickly recognizes business reality and respond flexibly to a changing business environment, and assure achievement of the mid-term business plan.

The company will reorganize domestic manufacturing plants in light of domestic demand, rationalize 21 domestic manufacturing plants by 30% by FY03, and reduce 98 domestic manufacturing and engineering companies by 25% by FY03.

Toshiba will also focus on expanding its outsourcing and overseas manufacturing plants in order to enhance competitiveness. The company will concentrate engineers dedicated to development of digital products at Ome Operations, in order to reinforce Ome as a development and production center.


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