LSI Logic Corp is transferring most of its semiconductor fabrication to Japan, where it is building a new 0.6 micron wafer fabrication facility in a joint venture with Kawasaki Steel Co, and will cut a total of 450 jobs. The biggest cut comes in Germany where its packaging plant in Braunschweig is to close at a cost of 275 jobs, and the decision highlights the growing structural problem in the German economy: growing numbers of German and international companies now find that the high cost of employment makes it too expensive to manufacture there. LSI Logic will still do development and pilot production in the US, but is cutting 175 jobs there as well. The cost of all this will be a restructuring charge between $95m and $110m to be taken against the third quarter figures, leading to a loss for the period of over $100m or $2.00 per share. As well as phasing out the assembly and test operations in Germany, the company is writing down other gaeing manufacturing assets and other items. The aim is to cut manufacturing and operating costs by $10m a quarter and return to profit in the fourth quarter. The Headland Technology unit, which manufactures personal computer building block chip sets and has been suffering badly of late, will be reabsorbed into the parent company.
