Toshiba To Cut Jobs As Chip Profits Fade

Japan's biggest chipmaker, Toshiba Corp., unveiled a sweeping restructuring on Monday that will cut 19,000 jobs over the next three years and consolidate its sprawling industrial empire at home.

Some 17,000 of those job cuts will hit Toshiba employees in Japan.

The total reduction, which represents 10 percent of Toshiba's global workforce, is scheduled to be completed by March 2004. The company will also consolidate or close 30 percent of its 21 domestic manufacturing facilities over the same period.

"The dramatic economic slowdown that began in the U.S. at the end of 2000 is becoming a global phenomenon that has undermined worldwide demand for information technology," Toshiba said in a statement.

"Toshiba's revised forecasts reflect this, particularly lower demand for electronic components for digital devices."

Toshiba warned it would see a net loss of 115 billion yen ($957.4 million) for the full year through next March, down from its original forecast of a net profit of 60 billion yen, and said it would not pay a dividend for the half-year to end-September.

The restructuring comes as Japanese electronics makers slog through the worst-ever information-technology recession and after rivals like NEC Corp. and Fujitsu Ltd. all announced steep staff reductions and stern profit warnings.

REALISTIC APPROACH

Industry watchers had expected Toshiba to come up with restructuring plans for its loss-making semiconductor operations and its wide-ranging measures were applauded by investors.

"(Toshiba is) being pragmatic and moving in the right direction given the environment they are in," said Marc Desmidt, director of the Japanese equity team at Merill Lynch Investment Managers.

Earlier on Monday, Europe's number two chipmaker, Infineon Technologies AG, said it was discussing cooperating with Toshiba in memory chips, a sector where profits have collapsed this year in the worst slump the industry has seen.

Toshiba said on Monday that it planned to combine dynamic access memory chip (DRAM) operations with those of a new partner but President Tadashi Okamura declined to name the partner.

Toshiba and Infineon already have a joint memory chip development project and Infineon's parent, Siemens AG, teamed up with Toshiba to develop next-generation mobile phones.

JAPAN HARDEST HIT

Toshiba's domestic manufacturing facilities, which make products ranging from washing machines to nuclear plants, will face the most severe job cuts, although the company did not give details.

Toshiba said it would slash its Japanese workforce by 17,000, or 12 percent, to 144,000 by the end of March 2004.

It also lowered its semiconductor capital expenditure target for this business year to 75 billion yen from an originally planned 140 billion yen.

"In order to boost production overseas, we have to make reductions at home. We have our unions' agreement in principle (on workforce cuts)," Okamura said.

The slump in the global semiconductor sector was sparked by a sudden chill in demand for personal computers, cellphones and networking equipment late last year.

Rival NEC has already announced its intention to pull out of DRAM chip operations, which are to be shifted to a 50-50 joint venture with Hitachi Ltd. by 2004.

NEC officials have said the company eventually plans to cut its stake in the venture substantially.

A Hitachi spokesman said his company was due to complete a review of its profit forecasts by around September 10 and any job cuts or other measures would be based on those figures.

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