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Philips Announces 4,000 Layoffs, Scrapping Of Personal Computer Chip R&D

September 4, 1990

EINDHOVEN, Netherlands (AP) _ The troubled Dutch electronics giant NV Philips said Tuesday it would discontinue several activities in its unprofitable components division and lay off 4,000 workers mostly in Europe.

The company will halt further development of a large memory computer chip that it planned to use in a new portable computer series, said Philips spokesman Jack Reemers.

Over the past few years, Philips has spent the equivalent of $842 million on a ″mega-project,″ much of which was devoted to developing the technology needed to make the one-megabit static random access memory (S-RAM) chip.

Reemers said Philips would also suspend research on the S-RAM chip being carried out with Siemens of West Germany and Thomson SA of France in the cooperative ″Jessi″ project. However, Philips will remain active in other Jessi projects.

Philips said it had committed itself to spending $42.1 million a year for eight years to support Jessi research on S-Ram chips.

″We are still very much involved in the Jessi project,″ said Reemers.

Philips president Jan Timmer warned at a special shareholders meeting in July that he planned to restructure several operations at Philips’ including the components division. He predicted losses for the year of more than $1 billion and 10,000 layoffs.

Philips also announced Tuesday it would end production of direct driven liquid crystal display (LCD) boards which are used as screens for portable computers.

The moves have led analysts to speculate that Philips is preparing to close down its computer operations. But Reemers did not say whether the company has such plans.

Philips has unsuccessfully tried to save its ailing computer operations by linking its business with a partner.

Reemers said Philips will also halt work on semiconductor lasers in the Netherlands and in Taiwan.

Dutch analysts gave mixed reactions to the news that the electronics giant was halting development of the S-RAM technology.

″Cost-wise, it is a good idea but strategy-wise I am not sure. They used to regard development of memory chips as crucial to their products,″ said an analyst who asked to remain anonymous.

″What is the value of a giant electronics company that can’t develop its own technology?″ he added.

In 1989, Philips’ components division had sales of about $6.2 billion and employed a total of 75,000 people.

Of those, 35,000 worked in Europe where most of the job losses will occur, according to company spokesman Reemers.

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