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Lam, Diamond announce layoffs

Lam Research and Diamond Multimedia cut workers, a sign of the tough times for various segments of the chip market.

A day after the Semiconductor Industry Association predicted that the chip industry was turning around, two companies announced layoffs.

Lam Research, which makes wafer fabrication equipment, said it is reducing its work force by approximately 500 employees.

Meanwhile, graphics chip and graphics board maker Diamond Multimedia said it would lay off between 120 to 180 employees. The layoffs constitute roughly 20 percent of the company's staff, a Diamond spokesperson said.

Lam's reductions, which primarily affect manufacturing and administrative employees, are part of the company's plans announced in June to reduce employment levels by 1,100, according to Lam.

"We will continue to preserve key research and development programs, customer support activities, and fund our strategic priorities in order to take advantage of market opportunities,'' said James W. Bagley, Lam's chairman and CEO, in a statement.

Both the wafer fabrication and graphics sectors have been hard hit in the past year. The chip equipment sector was jolted when the Asian financial crisis hit. The sudden slowdown in Asian chip demand, combined with an existing surfeit of chip fabrication facilities around the world, led to a virtual freeze in chipmaking equipment orders.

The graphics sector, by contrast, has been struggling with over-competition. More than 40 companies sell 2D/3D graphics chips, far more than the industry can support, several analysts have said. Earlier in the day, Diamond announced that it was licensing technology from IBM which will be used in an upcoming series of workstation graphics chips.