News Column

Biz Break: Silicon Valley workers spared in Fairchild Semiconductor layoffs

August 25, 2014

By Jeremy C. Owens, San Jose Mercury News

Aug. 25--Today: Storied Silicon Valley chip company Fairchild Semiconductor announces restructuring, but San Jose headquarters will be unaffected. Also: Amazon acquires rumored Google target Twitch.

The Lead: Fairchild Semi to cut workforce, Silicon Valley unaffected

Fairchild Semiconductor, a pivotal company in the foundation of Silicon Valley, announced plans Monday that could result in more than 1,000 jobs being cut, but said that its Bay Area workforce will be spared.

Fairchild announced Monday that it will close two production facilities -- one in Utah and one in Malaysia -- and reduce operations at a plant in South Korea, moves that will eventually impact about 15 percent of its global workforce, which totaled 8,659 at the end of 2013. Spokesman Bruce Fienberg confirmed in an email Monday that none of the positions impacted by the changes were based at the San Jose company's local locations.

Fairchild is well-known for its place in the founding years of Silicon Valley, when a group of engineers dubbed the "Traitorous Eight" left Shockley Semiconductor to launch Fairchild. At Fairchild, the group produced the first viable mass-produced integrated circuit, before three of them -- Robert Noyce, Gordon Moore and Andy Grove -- left again to form Intel, still the world's largest chipmaker.

While Intel is well-known for its chips inside computers, Fairchild has focused more on other industries in recent years -- the company estimated that 41 percent of its chips sold in the most recent quarter went for industrial and appliance needs. The company said in March that it is re-branding to focus on power-efficient chips for the next generation of mobile and wearable electronics, Fairchild's second-largest end market.

In its manufacturing move, Fairchild will eliminate five-inch wafer production lines and bring down its six-inch lines; factories in Maine and Pennsylvania will be unaffected.

"An adaptive supply chain must be the foundation of any global manufacturer's operations in the increasingly dynamic semiconductor solutions market," Fairchild CEO Mark Thompson said in Monday's news release.

Fairchild expects to pay $36 million in restructuring charges, but will realize cash savings of about $45 million to $55 million a year moving forward after the process is complete, the company reported. The move could help boost Fairchild's profits after the chipmaker's net income dropped 80 percent to $5 million in 2013 despite revenues staying consistent at $1.4 billion.

SV150 market report: Amazon buys rumored Google target Twitch

Silicon Valley technology stocks gained as Wall Street cleared another record hurdle, but Google fell as a reported acquisition target was instead snapped up by Amazon.

Amazon confirmed a Monday morning report from The Information, announcing after trading closed that it had acquired San Francisco video game live-streaming company Twitch for $970 million. Reports had suggested for months that Google was planning to acquire the company, which allows gamers to broadcast their play to a growing and rapt audience, for $1 billion. Ryan Mac of Forbes reported Monday that talks between Google and Twitch fell apart on concerns about antitrust issues, while The Information's Amir Efrati said both sides had concerns about how Twitch would integrate with YouTube's corporate structure. Amazon and Google could soon be fighting for more than just startups: A weekend report said that the e-commerce giant will soon introduce its own Web advertising business that could bump up against Google's main moneymaker. Google fell 0.3 percent to $590.57 on the day, while Amazon gained 0.7 percent to $334.02.

Hewlett-Packard added 0.8 percent to $37.15 despite losing in a court battle that sought to settle shareholders' claims against it for the botched Autonomy acquisition. Fellow Palo Alto company VMware kicked off its annual VMWorld conference with announcements of several new high-profile tech partnerships, but shares dropped 1.4 percent to $100.78. TiVo showed off a new product aimed at TV fans who have cut off their cable subscription, and the San Jose company's stock fell 0.7 percent to $13.60. Tesla Motors gained 2.3 percent to $262.55 after CEO Elon Musk promised changes to a couple who purchased an ad calling for alterations to the Model S, and Gilead Sciences hit a new all-time high while adding 3.4 percent to $107.45.

Up: Gilead, Tesla, GoPro, Yelp, SanDisk, SolarCity, HP

Down: Zynga, LinkedIn, AMD, VMware, Electronic Arts, Juniper, Salesforce

The SV150 index of Silicon Valley's largest tech companies: Up 4.11, or 0.25 percent, to 1,619.26

The tech-heavy Nasdaq composite index: Up 18.8, or 0.41 percent, to 4,557.35

The blue chip Dow Jones industrial average: Up 75.65, or 0.44 percent, to 17,076.87

And the widely watched Standard & Poor's 500 index: Up 9.52, or 0.48 percent, to 1,997.92

Sign up for the 60-Second Business Break newsletter at www.siliconvalley.com. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.

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(c)2014 the San Jose Mercury News (San Jose, Calif.)

Visit the San Jose Mercury News (San Jose, Calif.) at www.mercurynews.com

Distributed by MCT Information Services


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Source: San Jose Mercury News (CA)


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