National Semi to cut 500 jobs, sell Geode division

National Semiconductor Corp. plans to lay off 500 employees and sell its information appliance division in an effort to cut costs, the company said in a release Thursday. The move would take National Semiconductor out of the market for wireless baseband and set-top box processors.

Employees in the Santa Clara, Calif., company’s support, product development, and manufacturing division will be affected by the decision to eliminate the positions. National Semiconductor’s total worldwide headcount is about 10,000.

The company will solicit buyers for its Geode family of products, which has not delivered enough returns to justify continued research and development spending, said Brian Halla, National Semiconductor’s chairman, president, and chief executive officer, in a statement. Geode processors are used in set-top boxes for digital television, thin-client computers, and consumer access devices such as Microsoft Corp.’s Smart Displays. National Semiconductor’s main focus is a number of analog processors that are used in imaging and audio amplifier products, among other things.

As part of the announcement, the company also said that Taiwan Semiconductor Manufacturing Co. (TSMC) is now its primary supplier of silicon wafers for products built on .15-micron process technologies or lower, it said. The long-term agreement allows National Semiconductor to free up capital that would have been used to build a 300mm fabrication plant, an extremely expensive undertaking.

Many semiconductor companies are moving to 300mm wafer production, which allows more chips to be cut from a silicon wafer but requires significant start-up costs.

National Semiconductor expects the strategies to save the company about US$15 million a quarter starting in the company’s fourth quarter, which ends on May 25. It will report its earnings for its third quarter, the period ending February 23, on March 6.