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IBM tells 600 workers to cash in their chips

Semiconductor slowdown

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Six hundred heads will roll right out of IBM's gimpy semiconductor business over the next 60 days.

Close to 500 workers will be axed from IBM's Essex Junction, Vermont fab with another 100 workers being trimmed elsewhere. A total of 3,000 employees will be asked a take a week off without pay to help the struggling unit.

IBM's chip business was a sore spot in the company's second quarter. IBM's technology division, which includes the chip business and design services, posted a $110 million loss in the period, as revenue fell 34 percent.

IBM has been aggressively trying to woo customers for the microprocessor group and has picked up some nice wins with the likes of Apple and Nvidia. These contracts, however, have not been enough to offset the slow pace of overall orders, according to IBM.

The 600 workers will have a chance to look for other jobs within the company. But, if they cannot find more work, a severance package awaits.

This all comes on top of the more than 15,000 employees laid off over the past few months and hundreds of millions of extra cash IBM dolled out for its acquisition of PwC consulting in the second quarter.

IBM slashed a total of 1,400 jobs from its microelectronics business and total of 14,213 workers from its once vaunted Global Services business as of June 30. The Register noticed last month that PwC staffers were afraid for their jobs, and it turns out they were right to be scared. The axe has come down en masse.

IBM coughed up an additional $397 million for its PwC consulting buy "as a result of the review process and other adjustments." IBM had been working with PwC to figure out exactly how much extra cash was owed on top of the $3.5 billion already paid for the company.

All in all, both IBM's microelectronics and services businesses appear to be having some serious struggles. ®

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