Agere to exit optoelectronics business
Agere cites the reasons behind its decision as being the dramatic changes in the telecommunications industry that have led the demand for optoelectronics components to decrease considerably. The recent downturn has been particulary severe in the long-haul sector where Agere s optoelectronics products were primarily focused.
"We are redefining Agere as a premier provider of integrated circuit solutions to target the communications and computing opportunities that present the best long-term potential," said John Dickson, Agere’s president and CEO. "As we exit our optoelectronics business, our first priority will be to ensure that we fully support our opto customers during the transition and meet our commitments to them."
For the networking equipment market, which is served by the company s Infrastructure Systems Group, Agere will provide processing, aggregation, framing, switching and physical layer solutions, as well as ASICs for enterprise, access, metro and wireless networking systems.
For the end-user market, which is served by Agere s Client Systems Group, the company will continue to provide IC solutions for computing, storage, wireless handset and wireless local area networking (LAN) applications. The Client Systems Group represented almost 60% of Agere s revenues in the June quarter.
Changing business and consolidation brings job losses
The continued streamlining of the company s business, including the plans to exit the optoelectronics business and consolidate manufacturing operations in Orlando, will reduce Agere s active workforce from approximately 11,200 currently to about 7,200 by the end of December 2003. "I sincerely regret that these actions will have an unfortunate impact on so many of our people," said Dickson. "However, these decisions, which are driven by changing industry dynamics, are critical to accelerating Agere s return to profitability."
With the planned exit of the optoelectronics business, the company will discontinue or sell operations in its facilities in Dallas, TX; Alhambra and Irwindale, CA; and Matamoros, Mexico. In addition, as a result of this exit and the previously announced sale of the analog line card business, the company no longer needs to move manufacturing operations from its Reading and Breinigsville, PA, facilities to the Allentown, PA, facility (see related stories). As announced in January this year, the company intends to sell the Reading and Breinigsville properties once it discontinues those operations.
The company will move its remaining IC wafer fabrication line in Allentown to Orlando, FL, by the end of September 2003. This move will allow the company to consolidate all of its U.S. manufacturing operations in one facility.
Agere continues to seek a buyer for the Orlando operations and intends to sell the plant as an ongoing operation, allowing the company to continue sourcing products from this facility (see related stories). If the company does not identify a buyer, it plans to operate that facility at least through September 2004.
The company s manufacturing consolidation is consistent with its "fab-lite" strategy. Agere will leverage foundries for standard process technologies, continue its IC assembly and test operations in Singapore and Thailand, and maintain its wafer manufacturing joint venture with Chartered Semiconductor.
Agere s central campus will remain in Allentown, where the company s two sites will house research and development, operations, marketing, sales and other corporate functions.
Agere expects that these initiatives will allow it to achieve its target cost and expense structure, enabling the company to further reduce its quarterly operating income revenue breakeven point from the current $700 million level to $500 million during the second half of the calendar year 2003.
