Philips to Cut 1600 Jobs, Close Texas Plant

AMSTERDAM, Netherlands, March 14 -- Royal Philips Electronics said Thursday it will close a semiconductor plant in San Antonio, Texas, this year as part of a restructuring that will eliminate 1600 jobs. The company previously announced it would also close its semiconductor fabrication operation in Albuquerque, N.M. Philips also announced that Philips Semiconductors will complete the consolidation of a number of smaller nonmanufacturing-related sites and associated businesses, mainly in Europe and the US.

Philips said it had to cut capacity in order to return the division to profitability in the face of weak demand for consumer electronics products. Of the jobs lost, 600 will be in Albuquerque, 520 in San Antonio and the remaining 480 from administrative offices around Europe and the US, Philips said in a statement.

The semiconductor division lost 537 million euros (about $584 million) in 2002 and 609 million ($663 million) in 2001, contributing to record losses at Philips, the largest European maker of consumer electronics.

Scott McGregor, top executive of the division, said in an interview with The Wall Street Journal the current downturn in the chip industry is one of the worst ever and shows no sign of improving.

Philips said it will take a charge of 200 million euros ($218 million) to carry out the San Antonio closure, and it will cut its research and development spending on semiconductors by around 20 percent. The latest cost-cutting measures are in addition to a restructuring announced in April 2002, when Philips cut 7000 jobs from its worldwide work force of 219,000.

The semiconductor unit employs 34,000 and accounts for about 25 percent of Philips' overall sales. Philips posted a record net loss of 3.21 billion euros last year.

For more information, visit: www.philips.com