SAN FRANCISCO - Only days after its trade
association predicted that business would soon improve, the
semiconductor industry is demonstrating again the effects of a
relentless yearlong depression.
National Semiconductor Corp. reported last week a loss of $53.5
million for its first fiscal quarter, the largest in its history and
the worst so far in the industry's yearlong slump.
The report followed announcements earlier this week of austerity
measures that included pay cuts by the Intel Corp. and layoffs and
salary reductions by the semiconductor operations of Motorola Inc.
The industry that makes the silicon chips used in computers and
other electronic equipment has been mired in a slump caused by
persistent excess inventories, slowing computer sales, and severe
competition from Japan.
As for the outlook for a turnaround, ""it's like waiting for
Godot,'' said John J. Lazlo Jr., semiconductor industry analyst for
Morgan Stanley & Co. ""I don't look for any material improvement over
the short term.''
Charles E. Sporck, National Semiconductor's president and chief
executive, appeared to agree in his statement last week: ""We have
recently experienced a marginal improvement in semiconductor
orderrates,'' he said. ""But until we have a significant and
sustained improvements in those rates, our financial performance will
continue to suffer.''
National's loss, which had been expected, compares with a profit
of $35.9 million, or 40 cents a share, in the first fiscal quarter of
last year. Revenues in the 1985 quarter, which ended Sept.
22,plunged 20 percent, to $423.4 million, from $529 million.
National, based in Santa Clara, Calif., also said it would close
its operations for seven days during Christmas to save money. The
company this year has already laid off 1,300 in the United States and
others overseas. It has also instituted hiring freezes, other
temporary plant shutdowns and capital spending cuts.
Analysts expect virtually all other semiconductor companies to
report operating losses for the third calendar quarter and some to
report losses for the fourth quarter as well.
National's loss is as large as it is because of its heavy reliance
on commodity products that have been affected most by price wars, and
because of the company's heavy expenditures to modernize
itsfacilities. Moreover, third-quarter operating losses for
companies such as Intel and Advanced Micro Devices might be partly or
completely offset by interest income or tax credits, while
semiconductor losses for Texas Instruments and Motorola might be
counterbalanced by earnings from other operations.
Still, these companies are all acting to reduce the losses. Intel
recently instituted pay cuts of 4 to 8 percent for its entire U.S.
work force for the remainder of this year and said it would shutits
operations for six days during the Christmas season. …