Moto to revive chip division with $400m feed

More production to be outsourced

Motorola plans to increase spending on chip-making kit by 60 per cent this year in anticipation of a ten per cent increase in sales, general manager of the company's Semiconductor Products Sector (SPS), Bill Walker, told Bloomberg today.

That increase amounts to an extra $400 million. Small, perhaps, in comparison with the cuts the company has made over the past few years, but positive nonetheless.

During the last three years, Motorola has shut 19 out of 29 plants, all of them in the US and Asia. Such moves failed to prevent SPS posting a $1.52 billion loss last year and $1.91 billion in 2001, both contributing handsomely to the company's overall loss.

The new investment is unlikely to reverse the now-complete closure programme. Walker said SPS intends to outsource more production to foundries like Taiwan Semiconductor - which, not coincidentally, he was visiting this week. Motorola's own output is currently at 65 per cent of capacity, he admitted.

Walker denied that Motorola was planning to sell off SPS. ®