Belt Tightening in the Chip Sector

The semiconductor industry is living large this week with analysts pointing to a chip-injected recovery and Intel posting one of its best quarterly results.

But all is not well in every corner of the globe as Infineon Technologies and Microtune Thursday reported some corporate restructuring.

Munich-based Infineon said it is about to slim down its corporate structures even further by outsourcing its payroll accounting, major parts of the recruiting function and student intern hosting in Germany and Austria to EDS . The transaction, which is being characterized as a double-digit million-dollar sum, includes EDS taking over parts of the Infineon workforce.

The ten-year contract will take effect January 2, 2004 with final transfer of all processes to EDS by October 1, 2004.

“By outsourcing our payroll accounting and major parts of the recruiting function we are pressing further ahead with the extensive restructuring measures planned as part of the implementation of our Agenda 5-to-1 corporate strategy,” EDS head of human resources Dr. Thomas Marquardt said in a statement. “Taking over personnel processes is where EDS’ core competence lies, and so we can further improve the relevant services for employees at our sites in Munich, Regensburg, Dresden, Warstein and Villach.”

A worse fate has befallen Plano, Texas-based Microtune, which said it is preparing to sell its narrowband wireless communications business, which it acquired back in November 2001.

Located in San Diego, division focused on products developed with the Company’s Bluetooth and CableFree USB technologies. Microtune said it is also considering selling off the whole thing or even parts of its related wireless technology and products.

“Microtune is in the process of refocusing its strategies on its core technologies and strengths, which are in the broadband RF markets,” Microtune president and CEO James Fontaine said in a statement. “[This] enables us to sharply concentrate on our broadband communications and transportation electronics assets, our technology expertise and our commitments to our RF customers. It allows us to move forward into 2004 with a strengthened strategic focus, reduced operating expenses and a streamlined business.”

The company said its wireless communications business develops narrowband wireless silicon and systems products based on the Bluetooth standard. Microtune’s most recently developed technology, CableFree USB, consists of patent-pending silicon, hardware and software packaged in a manufacturing-ready solution, and it is designed to eliminate USB cables connecting ink jet printers and PCs in the home or office.

Both Infineon and Microtune have spent the better part of this year embroiled in legal battles concerning patent infringement.

Earlier this month, the U.S. Supreme Court denied a final plea by Infineon that would have revived its fraud case against rival Rambus. Rambus had been accused of deception while it was working with the JDEEC Solid State Technology Association — a standards-setting board — to develop DDR SDRAM memory technology.

Microtune has been on the losing end of legal wranglings with Broadcom.

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