Cirrus bales out of IBM and Lucent chip joint ventures
Plans to cut wafer fab capacity by 70 per cent
A couple of years back the then management of Cirrus Logic told The Register that chip fab capacity was going to be tight, 'fabless' semiconductor firms would therefore be in trouble and so Cirrus was going to do a deal with IBM to secure capacity, and therefore prosper. Oops. The boys who made this unfortunate strategic decision are no longer with the company, and Cirrus yesterday moved onto the next stage of its long march back, with the announcement of 500 job losses and the proposed reduction of its wafer fab capacity by 70 per cent. It's talking to IBM to reduce its 48 per cent stake in the Micrus joint manufacturing venture in East Fishkill, and is trying to sell its 40 per cent share of Cirent Semiconductor to its partner there, Lucent. Cirrus says it expects to take a charge of up to $500 million, and that it is trying to eliminate exposure to charges related to under-utilisation of the two fab plants. So basically, an earlier cunning plan to acquire enough capacity to strengthen its position against fabless rivals turned into a nightmare where Cirrus had to continually find things to chuck into the maw of its ever-hungry fabbing capacity. IBM and Lucent may be in a better position to get contracts into the plant (don't count on it in IBM's case), but don't expect Cirrus to make a bundle out of shedding its stakes in them. ® Click for more stories.
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