A bruised and battered National Semiconductor Corp has decided to get out of the low-end processor market, putting sections of its Cyrix Corp business and South Portland, Maine fab plant up for sale. The decision will lead to 550 job cuts, which will come through lay-offs, attrition and early retirement. The company plans to concentrate on the emerging information appliance market.
The company is looking for a buyer for the Cyrix unit that developed the PC-socket compatible x86 processor line. It’s not a profitable business, its just dragging us down, explained Bill Callahan, senior public relations manager at Natsemi, we’ve been losing money for four quarters, trying to fight Intel. Callahan said that the unit lost $35m in the third quarter of this year and is expected to lose $45m in the fourth quarter. The tooth and nail scramble between Intel Corp and Advanced Micro Devices Inc at the sub $1000 PC end of the market and terrible margins on the product have forced Natsemi out. The company is also courting possible purchasers of its state of the art South Portland wafer fab. The company will retain an interest in the plant.
Some analysts have predicted all along that Natsemi couldn’t survive in the sub $1,000 market place. They’ve finally recognized the inevitable, said semiconductor analyst at Dataquest, Joe D’Elia, citing Natsemi’s lack of focus as the reason why the firm has had to pull out. D’Elia also questioned if anyone would buy the x86 PC unit when all they would get is the name, a design team and some old product.
Natsemi is retaining the Cyrix unit that has worked on the MediaGX range of processors. The CPUs, which are also built around the x86 architecture, have multimedia extensions for audio and video. They are seen as the ideal platform for Natsemi’s launch into the information appliance age. Callahan cited the WebPAD internet access device Natsemi, due out in the third quarter this year, as the start of Natsemi’s push into a new market. D’Elia admits that the move is a logical one and that the GXMedia chip is a good product for its target market. However, he questions whether the information appliance age has yet arrived, saying the WebPAD is a product in search of a market.
