LSI Logic to close plant, displace 500 workers

LSI Logic Corp., blaming an adverse economy and a worldwide inventory correction in storage and communications markets, announced Wednesday that it would close its manufacturing facility at Colorado Springs, displacing some 500 workers.

The LSI factory, which was opened in 1983 and uses older manufacturing technologies, will be closed in August, the Milpitas, California-based semiconductor and storage equipment maker said. “Many” of the affected staff will be offered transfers, while the balance will be offered a “competitive” severance package, the company said in a statement.

“This decision is precipitated by the weakening national economy, sharp decline in end-demand and the build-up of inventory in the supply chain,” Wilfred Corrigan, LSI’s chairman and CEO, said in the statement.

LSI expects to take an estimated charge in its fiscal second quarter of $120 million to $150 million for restructuring and other charges, the company said.

The company said it expects to have more than enough capacity to meet the anticipated demand for its ASIC and standard products moving forward. Production is being consolidated at its two major factories in Gresham, Oregon and Tsukuba, Japan.

The news comes just days after Japan’s NEC Corp. said it would close DRAM (dynamic random access memory) production lines at its California plant with the loss of 700 jobs. NEC blamed a severe downturn in semiconductor demand. The same factor was cited by Cypress Semiconductor Corp. when it said Tuesday that it just managed to break even in the first quarter of the year. Almost every order received by the company was offset by cancellations, it said.

LSI Logic, in Milpitas, Calif., can be contacted at