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TSMC employees to take four to five days’ unpaid leave

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s top chipmaker on a contract basis, yesterday asked employees to take unpaid leave to help the company cut costs and combat the industrial slump driven by the deepening economic slowdown.

The new cost-cutting measures by the Hsinchu-based chipmaker came as economic turbulence is expected to last several months and could cut into most semiconductor companies’ revenues after driving factory utilization lower.

“Although our performance was very good in the first three quarters of the year, it began to decline rapidly in the fourth quarter,” company chief executive Rick Tsai (蔡力行) said in a video address to employees broadcast online yesterday.

FIVE DAYS

“It looks as if this period of economic weakness will last for a fairly long time, and business will become more difficult,” Tsai said. “The company must do its utmost to lower costs. At the same time, we will also do all we can to protect employees’ jobs.”

Employees at manufacturing departments have been asked to take five unpaid furloughs a month beginning this month on the back of falling factory utilization.

Starting next month, staff in all other departments will be asked to take one unpaid leave a week.

TSMC has been forced to take more stringent cost-control measures as it lowered its fourth-quarter outlook in response to shrinking demand.

FORECAST CUTS

On Monday, it slashed more than 8 percent from its revenue forecast for this quarter and cut its gross margin forecast by 4 percentage points.

More than one month ago, TSMC said it was considering slashing 20 percent from its capital spending for next year from US$1.8 billion this year.

To help employees reduce the effect of their lower monthly pay because of the reduction in working days, TSMC planned to allocate a portion of it’s profit-sharing distribution to help make up the shortfall in regular monthly income, Tsai said.
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