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Motorola to close three chip plants

Motorola Inc said it will close chip plants in Texas and Japan, resulting in 4,000 job cuts in its chipmaking business, 13 percent of the total division, as it targets a return to profit this year.

Chip-packaging plants in Sendai, Japan and in Austin, Texas, will be shut as well as part of a silicon-wafer facility in Sendai, spokeswoman Gloria Shiu said.

The job cuts, earlier reported on the Web site of US trade journal EETimes, include shedding of administrative staff worldwide, she said.

"This is part of our manufacturing consolidation plan to improve efficiency," Shiu said.

The firings are part of a 9,400 job-cut plan announced in December by Motorola Chief Executive Officer Christopher Galvin, who has pledged the second-biggest mobile-phone maker will earn US$0.15 a share this year after losses last year. Most of the world's chip-packaging plants are located in Malaysia, the Philippines and other lower-cost locations.

"It's really a capital-intensive business, in which margins are low," said Lloyd Tsai, who helps manage NT$2 billion (US$57 million) at Invesco Taiwan Ltd and owns no shares in Asian chip-packaging companies. "They may outsource more business to other companies in the future."

Production from the Sendai plants, run by Tohoku Semiconductor Co, will be moved to locations in Chandler, Arizona; Eastkilbride, Scotland and another facility in Sendai.

Motorola employs about 30,000 workers worldwide in its chipmaking business. The company doesn't plan to farm out more production to other companies as a result of the plant closings.

"Most of the production will be consolidated within our own operations," Shiu said.

The plant closings will take effect in the next 15 months. Motorola said earlier it will shift production from a Hong Kong plant that it's closing to existing operations in Tianjin and Kuala Lumpur.

The cost-cutting measures won't affect a plan to invest US$6.6 billion in China during the next five years, Shiu said. Motorola, which has the largest share of the mobile-phone market in China, started production at a chipmaking plant in Tianjin last year.

Motorola said it will bear the expense together with its suppliers and partners in China.

The company plans to spend about one-sixth of the US$6.6 billion in the next five years to make China one of Motorola's global research and development centers, said Michael Ning, a Motorola spokesman in Beijing.

The center will develop chips, cellphones and network equipment for the China market, he said.

The company reduced its global workforce by 39,000 jobs, or 26 percent, since August 2000 through firings and sales of businesses.
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