Microtune Streamlines, Lays Off More Than 1,000

Microtune , who
competes with Intel and Broadcom in the broadband communications and
transportation electronics chips space, Monday revealed that it has sold off
assets and laid off more than 1,000 employees in the last few months in
order to cut expenses by about $2 million.

The Plano, Texas firm, embroiled for the past few months in patent and
antitrust lawsuits
with Broadcom, agreed in March to sell assets of its Philippine
manufacturing facility to LCD chipmaker Three-Five, firing roughly 1,000
factory personnel. According to Microtune, many of the laid off employees
have been hired by TFS, which has agreed to address and build demand for
radio frequency subsystems.

Microtune is keen on retaining its radio frequency product base and so it
sold its Netherlands-based Microtune (Holland) B.V., design center, which
developed and marketed baseband technology such as demodulators for European
digital TV products to the Micronas Group last month. Microtune will
continue to have access to the Micronas digital IC technology for the
development of its digital video broadcast (DVB) terrestrial subsystem
products. Some 25 were shifted to Micronas with this sale.

Lastly, Microtune cut a swath through its Bluetooth division, laying off
more than 50 percent. The exact headcount eliminated was not made public and
Microtune did not respond to requests seeking comment but the firm said in a
statement that it will focus on its new CableFree USB product line.

Microtune will also continue making tuner, amplifier, upconverter, and
transportation electronics product lines, as well as invest in research and
development in the set-top box, digital television, PC/TV and LCD/TV

The firm said in the statement it believes the cost reductions will reduce
quarterly operating expenses of by approximately $2 million in the first
full quarter of reductions, which will be in Q3 of 2003. About 230 employees
remain with Microtune after the layoffs.

The semiconductor market had a rough go of it in the last year, but the
industry has stabilized and is on the verge of a healthy rebound, according to industry analysts making their predictions for next year.
Recent forecasts from Silicon Valley-based trade group Semiconductor
Industry Association (SIA) predict growth of about 21 percent to $169
billion in 2003, 22 percent to $206 billion in 2004, and then remain flat at
$206 billion in 2005.

Rather than address the strategic cost-cutting moves, Douglas J. Bartek,
Chairman, CEO, and President of Microtune, boasted about his company’s
recent legal wins against Broadcom in the press statement.

“Our proprietary silicon tuner technology has been validated by the federal
court in our recent patent lawsuit win and preliminary injunction against
Broadcom, where we asserted claims under one of our 24 granted patents in
tuner technology,” Bartek said. “Every one of the 25 patent claims we
asserted was deemed to be valid, every claim was infringed by Broadcom, and
the jury determined that Broadcom willfully infringed. This powerful
validation has reinforced our focus on our core RF broadband technologies.”

Microtune plans to file this month its Annual Report on Form 10K for 2002
with the SEC. The 10K will describe adjustments to the first three reported
quarters of 2002 and restatement for 2001 as previously reported.

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