IBM's struggling semiconductor business will lay off 600 workers and require employees to take a week of unpaid vacation, said an IBM spokesman.
Of the 600 jobs, about 500 will be go from the company's Vermont facility, said Bill O'Leary, an IBM spokesman. Most of the affected employees work in manufacturing support services for IBM's semiconductor business, he said.
Workers will have 60 days to apply for other jobs within IBM, O'Leary said. If those employees are unable to find another position after that time, they will be made redundant with a severance package of two weeks' pay for every year of service, up to 26 weeks, he said.
Revenue from IBM's technology group, which makes semiconductors for its own servers as well as for outside companies, dropped 34% in the second quarter, IBM said when reporting its second-quarter earnings in July. Monday's job cuts are intended to reduce IBM's long-term costs and improve profitability, O'Leary said.
The company will address short-term costs with the unpaid leave strategy, O'Leary said. A cross-section of IBM employees, including managers and executives, will be required to take the unpaid week, he said.
The Vermont facility is IBM's largest chip-making plant, but is a little behind the times, O'Leary said. IBM recently opened a state-of-the-art fabrication plant in New York that produces 300mm silicon wafers using IBM's 0.13-micron process technology.
The Vermont plant also makes silicon wafers at 0.13 microns, but on 200mm wafers, O'Leary said. Semiconductor manufacturers can cut more chips from larger wafers, improving the efficiency of the manufacturing process.
Tom Krazit writes for IDG News Service