Samsung tightens budget with cutbacks

AUSTIN (KXAN) - A memo was expected to go out to employees of Austin's two Samsung semiconductor plants on Friday, informing them of additional budget tightening measures at the company.

Local Samsung Spokesman Bill Cryer would not let anyone see the outgoing memo, but he said it would notify employees of cost-control measures going into 2009 that would include, but not limited to, cutting down on electricity use and scrutinizing promotions and pay raises.

"The semiconductor industry has been hit hard by the global economy," said Cryer.

While Cryer said the company is trying to prevent layoffs, they have lost about 50 to 60 people of their 1,800 Austin employees through attrition, which would be those jobs that become available when workers leave or retire. Although an official hiring freeze has not been announced, Cryer said Samsung would have to have an excellent reason to hire a new employee.

Globally, Samsung Electronics announced earlier this month it was cutting its targets for sales, capital expenditures and profit, reflecting an increasingly tough worldwide economy. Given cuts at various competitors, Cryer said Samsung's efforts to rein in costs are modest.

"Considering the scale of the economic downtown, our cutbacks have been mild," said Cryer.

Chu Woo-sik, the Korean electronics giant's executive vice president in charge of investor relations, said at an investor conference that capital expenditures will drop from 10 trillion won ($6.91 billion) this year to a range of 7 trillion won ($4.84 billion) to 8 trillion won ($5.53 billion) next year. However, he said the company was still determining the amount and that it was subject to change.

Samsung is the world's top maker of memory chips and liquid crystal displays, also referred to as LCDs. The company is facing a downturn in the once-reliable memory market and a rapid margin deterioration in the flat-screen sector, along with slowing sales of consumer electronics in general.

Samsung is not the only Austin semiconductor company experiencing cutbacks. Spansion is in week one of a two-week furlough in an effort to cut costs. The company's workforce of more than 1,100 employees is forced to take three weeks off without pay.

In a statement released, a company spokesperson said the decision came as the company anticipated a weak holiday season and is consistent with what is happening with other chip manufacturers.

Integrated circuit-maker Analog Devices Inc. is also shutting down its 30 person digital signal processing operation in Austin, according to the Austin Business Journal. The job cuts are scheduled to take place through the first quarter of 2009.