Nanotech - The Circuits Blog

Intel said Thursday it is consolidating its manufacturing operations in China and moving 2,000 jobs out of Shanghai.

"We are consolidating our manufacturing operations in China consistent with actions we announced a couple of weeks ago," Intel spokesman Chuck Mulloy said Thursday.

Intel said on January 21 that it would close chip plants to align its manufacturing capacity to current market conditions. At that time, Intel said between 5,000 and 6,000 employees would be affected.

"Assembly and testing facilities will be closed in in Pudong outside of Shanghai. This will take place between now and the second quarter of 2010," Mulloy said.

The action will move 2,000 jobs out of Shanghai. "There are two other sites. We have a large assembly test site in Chengdu in western China and the capacity is moving there. We also have a new fab (manufacturing facility) under construction in Dalian," he said. "The affected employees will be offered jobs at one of those sites."

"On the fab, we expect to begin production in the second half of 2010. It is a new fab at a new site, something we've not done in decades, so we will take our time in staffing and put extra training in place for employees. Right now the workforce in Dalian is relatively small but will ramp in the coming 18 months," he said.

For those who don't want to relocate to the other sites a standard severance package will be offered, he said.

In the wake of a big loss posted this week by SanDisk, layoffs appear to be in the offing.

On Monday, SanDisk said in prepared remarks that as part of its efforts to reduce operating expenses, "actions will be implemented in the current quarter" and will include "canceling or exiting a number of products and marketing activities, and will result in employee reduction in R&D, Sales & Marketing, G&A, and Operations."

And on Monday during SanDisk's third-quarter earnings conference call, CFO Judy Bruner spoke about more restructuring to come. In response to a question about operating expenditures, she said: "We're taking actions that we believe are quite aggressive and will cause us to make some pretty tough choices in the business." She later added: "We have not finalized yet our restructuring actions."

On Tuesday, Samsung published a letter withdrawing its $5.8 billion offer to buy SanDisk at $26 per share, citing the Milpitas, Calif.-based flash memory company's financial straits. (Although this doesn't necessarily mean that Samsung is abandoning its effort to buy SanDisk.)

Samsung, among other things, pointed to SanDisk's $250 million operating loss in the third quarter and the "considerable increase" in SanDisk's "risk profile."

But that wasn't all. In its letter, Samsung also mentioned "major job losses across your organization." (Full Samsung letter here.)

SanDisk shares were down 32 percent in trading at 12:20 p.m. PDT, to one of the lowest levels in years.

Update at 10:45 p.m. with additional information throughout.

Responding to "business realities," Nvidia is cutting its workforce by over six percent.

Nvidia, the world's largest graphics chip supplier, on Thursday announced a workforce reduction of 6.5 percent "to allow for continued investment in strategic growth areas," the company said in a statement. "As a result, Nvidia expects to eliminate approximately 360 positions worldwide, or about 6.5 percent of the company's global workforce."

The company expects to record restructuring-related charges of approximately $7 million to $10 million in the third quarter of fiscal 2009 in connection with the reduction. These pre-tax charges are comprised of severance and related expenses and are expected to be charged primarily against NVIDIA's operating expenses, the company said.

Derek Perez, an Nvidia spokesman, said this is related to a discussion in its second quarter 2008 earnings conference call "about how the business outlook has changed dramatically from what we thought it was going to be at the beginning of the year."

"Our action today is difficult, but necessary considering current business realities. Despite our reduction, we will continue to invest in selective high-growth opportunities like our revolutionary CUDA parallel computing technology and our Tegra mobile single-chip computer," said Jen-Hsun Huang, president and CEO of Nvidia in a statement.

Nvidia has been in the throes of a minor stock meltdown. On July 2, Nvidia announced a one-time charge of $150 million to $200 million to cover warranty, repair, return, replacement costs connected to weak die/packaging material in laptop graphics chip products. Then on Thursday, July 3, shares plunged $5.54, or just over 30 percent, and closed at $12.49. And share prices have continued to fall--though how much of the post-30-percent drop can be attributed to the weak stock market is not clear.

Both Dell Computer and Hewlett-Packard have issued advisories, workarounds, and, in some cases, extended warranties to deal with potential computer breakdowns related to the Nvidia graphics glitch.

Nvidia has also faced stiffer competition from its main rival, the ATI graphics unit of Advanced Micro Devices. ATI's newest midrange and high-end graphics boards--launched in June--were well-received and typically priced at a discount, though roughly equal in performance to Nvidia boards. This forced Nvidia to cut prices on its performance graphics chips.

The workforce reduction is expected to be completed by the end of the third quarter of fiscal 2009 ending October 26, 2008. Nvidia said it will provide employees affected by this reduction with severance packages, counseling, and job placement services.

Being fabless isn't so hip these days.

Rambus and MIPS Technologies are both chip companies that don't have their own chip fabrication facilities. Intel does. Perhaps not coincidentally, Rambus and MIPS are restructuring, while Intel's business is coasting on top of surging processor shipments.

Both Rambus and MIPS, which make a living off licensing intellectual property for chips, announced layoffs this week. Intel, meanwhile, is selling lots of its tiny Atom processors and seeing processor shipments surge overall.

Rambus said Thursday that it will reduce its workforce by approximately 90 positions and will take a restructuring charge of approximately $4 million in the next two quarters. Earlier in the week, MIPS announced a restructuring charge it estimates at between $4 million and $5.5 million, and layoffs of its own: 15 percent of its 512 employees. "We believe the market continues to show signs of softness," MIPS said in a statement.

Don't tell that to Intel. IDC released a report this week showing that Intel processor shipments were up 20.8 percent in the second quarter over the same period last year. Intel market share also crept up by 0.9 percent in the second quarter, bringing it to 79.7 percent, according to IDC.

And sales of Intel's Atom processors are exceeding expectations, according to Reuters. The report quotes Chief Financial Officer Stacy Smith, who said that "Atom is off to a very, very rapid start, far exceeding our expectations when we started the year."

The Atom processor is used in high-profile products such as the Asus Eee PC and Acer Aspire.

Barring major strategic blunders, Intel appears to be on course to make gains in other markets. The company will preview its next-generation "Nehalem" Core i7 chip architecture at the Intel Developer Forum next week. Core i7 processors are due to ship in the fourth quarter.

And Intel is ramping up production of its latest generation of 45-nanometer mobile processors now. New ultra-low-power chips (rumored to appear in the next-generation MacBook Air, among other ultraslim notebooks) are due in September. Also, the chipmaker's first quad-core mobile processor debuted this week in laptops from Lenovo and Hewlett-Packard.

Advanced Micro Devices is getting set to launch updated Phenom processors amid rumors that the chipmaker is reducing its workforce by 5 percent.

AMD is slated to begin shipping quad-core Phenom 9850, 9750, 9650, 9550, and 9150 processors in the coming weeks, according to sources close to the company. The "50" branding scheme indicates that the processors are the B3 version of the Phenom that fixes the "TLB" bug. This was first reported in DigiTimes.

Later, AMD will also ship updated triple-core processors, including the 8750 and 8560. Updated triple-core processors will not necessarily be B3 versions, however, according to sources.

Maybe more importantly, AMD is in the midst of handing out pink slips, according to a report in The Inquirer. The report states that AMD is "quietly" cutting about 5 percent of its workforce across the board, not in specific areas. The report also states that AMD may badly miss its numbers this quarter. AMD, when contacted, said that it can't comment on "rumor and speculation."

In related news, AMD announced Thursday the appointment of Nigel Dessau as chief marketing officer. Dessau joins AMD from Sun Microsystems, where he was senior vice president of storage marketing and senior vice president of alliances and licensing. Prior to that, he was at StorageTek and IBM. Dessau will be based in Austin, Texas and report to AMD's Office of the CEO.

Deassau will be challenged to market products if AMD doesn't deliver them in a timely manner and at better performance levels. Over the last year or so, AMD has botched processor launches and delivered underperforming products. The quad-core Barcelona was launched in September of last year but major computer suppliers such as Hewlett-Packard (HP) and Sun Microsystems have yet to ship systems. (Shipments are expected soon.) Though quad-core and triple-core Phenom processors are available from HP, for example, the reception has generally been muted. AMD-ATI's 3800 series of graphics cards have been one of the few bright spots.

In January, CEO Hector Ruiz said that he expects AMD to return to profitability "in the second half of the year beginning in the third quarter...We're not going after unit share just for the sake of unit share."

Note: HP is offering systems with the Phenom X3 8600B, (2.3 GHz), Phenom X4 8700B processor (2.5 GHz), and Phenom X4 9600B processor (2.3 GHz), among other AMD chips.