April 10, 2006 – Facing increasing pressure particularly from Asian competition, Altis Semiconductor, the chipmaking JV of Infineon Technologies and IBM, said it will lay off 323 workers (about 15% of total workforce) in an effort to reduce its “oversized” operation.

The company blames manufacturing and labor advantages at Asian and Chinese firms for falling prices and weakening European chip manufacturers. Production is only up to 75% of market demand, the company noted, and its production costs are on average 30% higher than other chip providers.

Among the moves, the company plans to reduce output by nearly 30%, from 1420 200mm wafers/day (about 43,000 wafers/month) to 1015 wafers/day (about 30,500 wafers/month). It also will reduce its operation in Corbeil, while investing 15 million euros ($18.1 million) in more advanced process technologies.

Under the new plan, the company also will adopt a new manufacturing schedule of 2×12 hours for four teams, a setup already in use at IBM and Infineon, the company noted. Realigning to the new manufacturing process, Altis plans to lay off 323 workers and about 100 contract workers.

Altis was formed in July 1999 as a 50-50 JV, at the site of IBM’s former chipmaking facility in Corbeil, south of Paris. The company is capable of chipmaking processes ranging from 0.25-micron (aluminum) to 0.13-0.18-micron (copper). Sales in 2005 totaled roughly 446 million euros (40% in Europe, 30% each in North America and Asia).

Infineon said in January it was utilizing Altis to offer RF CMOS, bipolar, and SiGe process technologies as foundry services, with initial customer Toumaz Technology Ltd. utilizing a 0.13-micron RF-CMOS process for an ultralow-power sensor interface and transceiver targeting medical device applications.