In an effort to curb excess costs, National Semiconductor said it will consolidate its wafer manufacturing operations in Greenock, Scotland, eventually resulting in cuts in the workforce there.
One manufacturing line will be closed and consolidated into the remaining line, with the company expecting that employment at the facility will decline from 1,000 to 400 starting in March of 1999. Some employees will be transferred to other manufacturing facilities, but the company did not state how many might be affected.
The consolidation will result in a one-time charge of $25 million for the quarter ending November 29, 1998.
The news of the consolidation came yesterday, the same day the Wall Street Journal reported ongoing safety issues at the plant, including allegations of chemical releases and lax safety procedures that may have led to high rates of health problems among the plant's current and former workers.
National said it still has plans to seek investors who are interested in running the facility as an independent chip foundry.
National reported a smaller-than-expected quarterly loss for its fiscal first quarter earnings last month, saying that the company's downturn was showing signs of bottoming out. Still, National said its chip plants were running at 41 percent of capacity, far less than its target of 85 percent, which is putting a squeeze on profit margins.
"We currently have the equivalent of one factory too many to meet the business level of the next four to five years," said Brian Halla, president and chief executive officer of National Semiconductor in a statement. The consolidation is "a direct result of continuing softness in the semiconductor market and of factory utilization rates below 50 percent," he added.
National has been hurt by lost market share in the analog and networking industries this year, and production problems with its recently acquired Cyrix chips also continuing to dampen the company's profitability.