Taiwan Semiconductor announces hiring freeze

Taiwan Semiconductor Manufacturing, the world's largest contract chip maker, said Tuesday that it was imposing a general hiring freeze amid a global economic downturn that saw its latest monthly sales post the biggest decline in nearly two years.

News of the freeze coincided with a forecast from an industry group, World Semiconductor Trade Statistics, that global semiconductor sales would drop 2.2 percent in 2009, reversing its May forecast for 5.8 percent growth.

J.H. Tzeng, a spokesman for Taiwan Semiconductor, said any new hiring would have to be justified case by case. ''Of course this is because of the economic slowdown,'' he said. ''Generally speaking, there's a hiring freeze.''

Taiwan Semiconductor's chief executive, Rick Tsai, told a supplier conference last week that the company did not rule out any cost-cutting measures, local media reported Tuesday.

Taiwan Semiconductor is encouraging employees to use accumulated leave to cut costs because workers are compensated for holidays they do not take, Tzeng said.

Separately, AU Optronics, Taiwan's largest maker of liquid-crystal displays, will cut salaries of as many as 15 executives by 15 percent, and directors will have a 10 percent pay cut, said Yawen Hsiao, a spokeswoman for the Hsinchu-based company. She declined to provide more details, including the timing of the planned reductions.

The two companies supply components used in Apple iPods, Sony televisions and Motorola mobile phones.

Taiwan Semiconductor is one of the first major Asian chip makers to acknowledge a freeze in hiring.

''Utilization rates are falling, the outlook for the industry as a whole is not good, and we can only see a recovery in the second half of 2009,'' said Warren Lau, head of technology research at Macquarie Securities. ''If we look at their smaller peers, they've also been laying off staff, although those haven't been so publicly announced, so this further reaffirms the fairly severe downturn.''

Companies in South Korea and Japan are often much more reluctant to take or disclose similar actions. In Japan, NEC Electronics shed 685 employees in March, and executives said last year that they had frozen hiring for the most part.

While Asian chip firms have been low-key about their cost-reducing efforts, North American ones have been more public.

Applied Materials, the world's biggest chip equipment maker, said last week that it would slash 1,800 jobs, or 12 percent of its work force, as it warned that profit in the current quarter would fall far short of Wall Street expectations.

National Semiconductor said last week that it would reduce its workforce by 5 percent as it cut its expectations for its fiscal second-quarter revenue.

And the industry leader, Intel, which makes central processing chips for 80 percent of personal computers, also shook the market last week when it cut its fourth-quarter revenue forecast by about 14 percent, citing the global economic downturn.