National Semi Hangs up on Cell Chips

In the midst of a massive restructuring, National Semiconductor Wednesday said it is still looking for someone to buy its division that covers appliances and the group that makes chips for cell phones.

Originally reported back in February 2003, the granddaddy of chipmakers said it was considering selling off its Information Appliance (IA) unit, planed on cutting 5 percent of its worldwide workforce of 10,000 and outsource its advanced chips to Taiwan Semiconductor Manufacturing Corporation (TSMC) .

The Santa Clara, Calif.-based company says it has entertained conversations with several prospective buyers of the IA business unit, but said a sale is not a guaranteed slam-dunk.

The IA unit consists primarily of the Geode family of products, as well as its cellular baseband business. The Geode product family and baseband businesses account for less than 5 percent of the company’s total revenue.

To cut costs, National said it is closing the cellular unit and cutting about 340 jobs. Adding in the 500 positions slashed earlier this year, the company said its headcount will eventually stand at about 9,200 employees. National did say it would continue to support existing customer programs impacted by the cuts.

The company says the cost cutting will save it about $30 million per quarter, or $120 million a year. National said it could save about $16 million alone if IA gets sold off.

“These steps increase our operating margins as we focus our investments in National’s high-value, high-margin analog products such as power management, portable power, displays, audio and op amp solutions,” National Semi chairman, president and CEO Brian Halla said in a statement.

In addition to the closures, National said it still wants to prioritize its R&D spending on higher-margin analog businesses.

Helping the matter is a reworked deal with TSMC to make it National’s supplier of wafers for products with feature sizes at and below 0.15-micron. National said outsourcing to TSMC allows it to save money because it would not have to build its own 300mm wafer fab .

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