IDT suffers from gross overcapacity

Will take additional charge in Q2

IDT is still producing too many chips. Today it announced details of its plans to restructure its business following poor financial results for its second quarter. The company, which makes the x.86-compatible range of WinChips, as well as a number of other semiconductor products, said it was still suffering from overcapacity, despite the closure of its San Jose fab. IDT said that it will make an additional charge of between $115 to $140 million in its second quarter. It had anticipated making a charge of between $50 to $60 million in that period. The overcapacity, claimed IDT, was because the size of its Oregon fab as well in advances it has made in scaling its .25 micron process technology. "The review revealed that currently projected production volumes and related cash flows from the Oregon facility would not be sufficient to recover the carrying value of that manufacturing facility," the company statement said. Len Perham, IDT's president, said: "This situation and IDT's own technology advancements have created significantly more capacity than we can reasonably in the near term." ®

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