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Cypress warns, restructures
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March 9, 1998: 2:24 p.m. ET
Chip firm expects lower first-quarter revenues; will shut plants, slash jobs
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NEW YORK (CNNfn) - Cypress Semiconductor Corp unveiled key restructuring moves designed to concentrate on new chip technologies as it warned of lower revenues in its first quarter.
The company said it expects first-quarter revenues to drop between 4 and 9 percent.
Cypress Chief Executive Officer T.J. Rodgers said the company, which operates four advanced wafer chip fabrication facilities, will shut down or downsize three of its plants to increase production in its 0.35- and 0.25-micron technologies.
The restructuring will result in the elimination of 100 manufacturing positions in its Round Rock, Texas, facility. Cypress, which is based in San Jose, Calif., is downsizing that facility to eliminate production of static random access memory chips.
Cypress is also closing one of its plants in Bloomington, Minn., to move operations to its 0.35-micron plant, also in Bloomington. The company will also shut down its test plant in Thailand to consolidating a majority of its test manufacturing operations into Cypress' new Manila plant.
There will be no staff reduction or additional hires at the Minnesota plant. The company will replace approximately 570 subcontract workers in Thailand with 250 new Cypress employees.
"The restructuring is long overdue," said Henry Voskoboynik, a tech analyst at Forum Capital Markets.
"Right now, Cypress competes in the lower end of the market. By implementing better technology, it allows them to move into different markets where they can sell products at higher prices and gain higher revenues."
Voskoboynik added that the move will allow Cypress to compete more effectively with such chipmakers as AMD and Micron Technologies.
Cypress is the latest chipmaker to warn of lower first-quarter revenues. Last week, Intel and Motorola issued similar warnings.
"Cypress' revenue peaked in the third and fourth quarter of 1995 in the $170 million range," Rodgers said. "Since then, an industry slump has held our revenue below that number despite soaring unit demand."
Shares of Cypress (CY) dropped 3/16 to 8-11/16 at midday. 
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