Applied Materials to sack as many as 1,300

World chipmaking equipment leader says it is making cuts in reaction to lacklustre PC sales

PUBLISHED : Friday, 05 October, 2012, 12:00am
UPDATED : Friday, 05 October, 2012, 8:57am

Applied Materials, a world leader in chipmaking equipment, plans to cut up to 1,300 jobs as lacklustre personal-computer demand leads customers to slow orders for manufacturing tools.

The plan is to cut a minimum of 900 workers, resulting in pre-tax costs of US$180 million to US$230 million, through a voluntary retirement programme and other actions.

The restructuring would save between US$140 million and US$190 million a year, the Santa Clara, California-based Applied Materials said in a statement yesterday.

Investors and analysts track Applied Materials' earnings as a gauge of optimism about future growth in the overall electronics industry.

The personal computer market may grow by less than 1 per cent this year, its worst showing in more than a decade, according to market researcher IDC.

That means Applied Materials' customers, such as dominant maker Intel, face slowing orders for components, reducing their appetite for spending to increase output.

Applied Materials shares were little changed at US$11.16 at the close in New York on Wednesday. They have gained 4.2 per cent this year.

In August, the company gave a forecast for fourth-quarter sales that was less than analysts had estimated. At the time, chief executive Mike Splinter said orders for chip gear would pick up in the final three months of the year.

On average, analysts now predict sales in the period that ends later this month will fall 27 per cent to US$1.58 billion.

In July, Applied Materials reduced its projection for industry-wide factory equipment sales for this year to between US$30 billion and US$33 billion, compared with an earlier guide of US$32 billion to US$35 billion.

Semiconductor equipment orders are seen as a pointer to the broader electronics industry because chipmakers such as Intel and Samsung vary spending on equipment based on their projections for demand as much as two years in advance.

Last month, Intel slashed its own third-quarter sales forecast, blaming reduced orders from personal-computer makers.