Bangalore: The economic slowdown in the US and parts of Europe has hurt the prospects of the global semiconductor industry which makes chips for everything from cars and cameras to gaming consoles and phones, and the impact is being felt in India, home to the development centres of these firms as well as home-grown companies that help develop these chips.
The slowdown in developed markets has caused customers to defer or cancel purchases of electronic equipment and new cars forcing multinational chip companies to issue profit warnings and announce layoffs. And their Indian arms haven’t been immune to the turmoil.
Freescale Semiconductor India Pvt. Ltd is planning to lay off 150 employees, said a recruiter who did not want to be named for fear of jeopardizing his relationship with the company.
San Jose, California-headquartered Magma Design Automation Inc., a developer of software for semiconductors and electronic products, laid off about 15 junior engineers in India a few months ago, according to an external recruiting consultant who did not wish to identified.
And Nvidia India, which makes graphics chips for game consoles, computers and mobile phones, laid off around 70 people across its four locations of Mumbai, Hyderabad, Pune and Bangalore.
The moves echo happenings halfway across the globe.
On 31 October Freescale Inc.’s chairman and chief executive Rich Beyer announced a 10% cut in workforce, amounting to 2,400 jobs, following declining automobile chip sales and a proposed sale of its mobile phone semiconductor unit. The Austin, Texas-based company’s mobile phone chip sales have fallen along with the fortunes of its former parent and biggest customer Motorola Inc.’s handset business.
In India, Freescale employs 1,400 people in Noida near New Delhi and Bangalore. An India spokesperson for the company said the global layoff would begin this quarter and continue into early 2009. But, “at this point, we are not in a position to discuss the specific impact in India”, the spokesperson added.
Magma India managing director Anand Anandkumar asked for time until next week to respond to queries. Around five months back, Anandkumar in an email statement said the company withdrew at least 20 offers made to engineering students in campus recruitments, as Mint?had reported on 11 July.
No takers? Mobile phones on display. The global semiconductor industry, which makes chips for everything from cars and cameras to gaming consoles and phones, is feeling the impact in India too. Madhu Kapparath / Mint
California-based Nvidia Corp. has said it will cut 360 jobs across the world. Varun Dubey, product public relations manager at the company’s Indian arm, said the layoffs here were due to restructuring. “When we changed our R&D (research and development) strategy, we found that many people did not fit,” he added, without elaborating.
Meanwhile, NeoMagic Semiconductor India Pvt. Ltd and WiQuest Semiconductors India Pvt. Ltd are both winding up operations after their US parents closed down.
Noida-based NeoMagic Semiconductor India, which used to make chips that enable multimedia features on handheld devices, has fired all 30 engineers and a small administrative staff is working out the modalities of shutting shop in India. Last month, unable to raise funds, the Santa Clara, California-based NeoMagic Corp. announced closure. The engineers at the Indian unit “are still looking for jobs”, said Hari Prakash Agrawal, managing director of NeoMagic India.
In Bangalore, WiQuest Semiconductors India, which employs 45 engineers, is closing down after its parent, headquartered in Allen, Texas, which used to design, develop and supply chips to computer, consumer electronics and mobile companies, went belly up after it fell short of capital. “As WiQuest ceases to exist globally, we cannot continue as WiQuest anymore. We have to figure out what will happen,” said an official from WiQuest India who asked not to be named because he is not authorized to speak to the media.
As consumer markets in developed countries feel the effects of slower economic growth, sales of cellphones, cars and other gadgets fall and the semiconductor industry “is adversely affected with many companies posting lower sales in Q3 and lowering guidances for Q4”, said Ganesh Ramamoorthy, principal research analyst at Gartner Inc.’s local unit. “In a recession, there will not only be a potential reduction in the number of systems sold, but also a move to lower-cost systems with less semiconductor content.”
Unlike a decade and a half back when chip sales were driven mainly by large corporations investing in information technology and telecom systems, today chip sales are driven mainly by the consumer segment which accounts for nearly 60% of the total semiconductor market, Ramamoorthy added.