Cirrus Logic to Reduce Fab Capacity

-- Semiconductor International, 11/1/1998

Cirrus Logic Inc. (Fremont, Calif.) initiated a program to eliminate ~70% of its total fixed wafer fabrication capacity and related fixed costs.

The program includes the phasing out of certain businesses and will have an immediate and positive impact on the company's earnings and margins. As a result of these actions, the company has commenced a workforce reduction of 400-500 of its employees and will incur restructuring and other charges of up to $500 million.

In moving closer to a fabless model, Cirrus Logic will focus on its profitable core businesses without the distraction of having to keep its fixed-capacity fabs filled. Cirrus Logic reports that it has entered into discussions with IBM to restructure its 48% stake in MiCRUS. The company is also in separate discussions with Lucent to sell its 40% stake in Cirent to Lucent or other third parties. By phasing out low-margin products, the company anticipates operating under a more profitable and sustainable business model.