ST-NXP Wireless cuts 500 jobs

Like many wireless chip companies, ST-NXP Wireless feels the brunt of the economy and shrinking handset sales growth.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 11/7/2008

ST-NXP Wireless has announced plans to reduce its global workforce by about 500 people, including subcontractors, from its current total of more than 7,500 people.

The job cuts were not unexpected and had been rumored since STMicroelectronics and NXP first announced plans to merge their respective wireless operations in April to form a joint-venture supplier with customer agreements at many of the major handset manufacturers. Since then, ST has bought NXP out of the new company and merged in EMP (Ericsson Mobile Platforms), as it continues to target wireless industry market share and mobile semiconductor competitors.

The economy has forced handset sales growth to slow since April, however, and the wireless chip industry is now facing increased competition. Indeed, such market conditions last week forced a layoff at Freescale Semiconductor, which has also announced plans to exit the cellular handset chip business. Texas Instruments has also announced plans to sell part of its cellular baseband operation.  Further, handset makers Motorola and Nokia have also both announced layoffs on the economic and market conditions.

"With today's market outlook appearing quite different than it did just a few months ago, ST-NXP Wireless is taking necessary action to adapt its R&D resources and cost structure to the new business conditions in the industry," the company said in a statement Thursday.

The headcount reduction, as well as other efforts, are expected to contribute to the approximately $250 million in cost savings ST and NXP estimated at the time of the merger's announcement.

Restructuring charges from the layoffs are expected to be in the range of $50 million, mostly accrued in ST-NXP Wireless and ST's consolidated balance sheet at the end of September, the company said.

With the announcement, ST-NXP Wireless joins a growing list of semiconductor industry companies that have announced workforce reductions this week, including AMD, Cadence, and IBM.