NEW YORK – Facing a stubborn slowdown in the microprocessor industry, IBM Corp. announced Wednesday it would cut about 1,000 jobs from its seven U.S. chip manufacturing and development plants and another 180 jobs at a storage technology plant in Minnesota.
Armonk, N.Y.-based IBM said it aimed to reduce the size of its Microelectronics Division by 4.7 percent to about 20,500 employees from 21,500 workers. IBM employs about 320,000 people worldwide.
The largest share of the cuts will occur at IBM's manufacturing plant in Burlington, Vt., where some 500 employees, roughly 6 percent of the plant's 8,300 w orkers, will be laid off.
"We are taking the reductions in response to the severe downturn in our industry," said IBM spokesman Jeff Couture in Burlington, the largest of IBM's chip facilities.
In Endicott, N.Y., where IBM packages chips and manufactures circuit boards, 400 designers, technicians, engineers and managers will lose jobs, said Todd Martin, spokesman at the Endicott plant, which employs 5,500.
IBM's chip making plant in East Fishkill, N.Y. will also lose workers, as will design and development labs in Raleigh, N.C.; Rochester, Minn.; Fremont, Calif., and Boulder, Colo., said Microelectronics Division spokesman William O'Leary.
Separately, IBM will cut another 180 jobs in its Storage Technology Division at the Rochester plant.
Although layoff notices have been sent to more than 1,000 employees, IBM expects some to find employment elsewhere inside the company, O'Leary said.
In midday trading on the New York Stock Exchange, IBM shares were off $1.55 at $112.65.
Big Blue's microprocessors are used in devices ranging from corporate-level server and storage computers, to cell phones and electronic games. The company makes few processors used in personal computers, and was insulated from the steep drop in that industry's fortunes, O'Leary said.
IBM's plans to open a new chip-making plant in East Fishkill are not affected, O'Leary said. IBM will begin initial production in August, with the plant moving to full capacity in the first quarter of 2003.
In October, the company said it had a 30 percent decline in microelectronics sales revenue from outside manufacturers compared with a year ago. IBM senior vice president John R. Joyce predicted the current fourth quarter would produce a similar decline.
Over the summer, O'Leary said the division began girding for the downturn by cutting costs by slashing overtime, adjusting work schedules and eliminating contract workers. Despite those measures, O'Leary said layoffs were needed.
"It's skills rebalancing and elimination of certain positions," he said. "It's driven by the ongoing adjustment to our product portfolio."
The company's facilities in Canada, France and Japan - with about 15 percent of the division's work force - will not be affected, he said.
IBM's construction of a pair of microelectronics plants in China is continuing on schedule, O'Leary said. In Beijing, the company plans to manufacture circuit boards for Nokia cellular phones, and in Shanghai, IBM workers will package chips made elsewhere, O'Leary said.
Jobs lost in the United States will not be transferred abroad, he said.
The layoffs take effect in one to two months. Laid-off workers will be offered severance packages, O'Leary said.
IBM started the year with 316,000 worldwide employees, and currently counts some 320,000. The company hired 27,000 new employees this year, and, although it periodically cuts jobs, IBM intends to close the year with slightly more employees than it started with, O'Leary said.