Agere to exit optoelectronics

Agere Systems is to end its optoelectronics activities — which focus mainly on the hard-hit haul sector — by June 2003 and cut staffing from 11,200 to 7,200 (36%) by December 2003. Instead it will focus on ICs for computing, storage, wireless handset and wireless LAN applications.

Optoelectronics sales rose 84% to USD1.2bn in 2001 (30% of total sales), but fell to just 10% of its USD560m total in fiscal Q302.

Agere quotes RHK's forecast that opto component revenue will decline from USD7bn in 2000 to USD2.3bn in 2002.

Agere's market share has drifted. Gartner/Dataquest says that, while it was number-one in optical communications modules in 2001, it fell below 10% in Q2/2002.

After laying off almost 7,000 staff last year and announcing the closure of two factories in Pennsylvania in January, Agere will discontinue or sell operations at facilities in Dallas, TX, Alhambra and Irwindale, CA, and Matamoros, Mexico by end-June 2003.

The company is looking to sell the Orlando plant as an on-going operation, allowing the continued sourcing of products from this facility. If it does not find a buyer, it will operate the facility at least through September 2004.

Agere says it will use 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.

The company says the cost-cutting steps will lower its quarterly revenue break-even from USD700m to USD500m in second-half 2003, allowing it to return to profit.

Denis Regimbal, VP sales for EMEA, told Lightwave Europe that Agere had "considered every possible scenario for refocusing its opto activities, but the cost-saving was not sufficient..We don't see a way to achieve our objective with opto". He says that, last January, Agere believed that the market would recover by the end of 2002.

But, says president and CEO John Dickson, "We believe the optoelectronics business has changed fundamentally for the long term. The signs of it getting better over the next two years are limited."

After lowering its quarterly break-even sales target from USD300m to USD250m, Minnea-polis-based ADC Telecommuni-cations is to decide by the end of October whether to sell or close its optical components business.

This includes tunable and pump lasers and facilities in Canberra in Australia, Jarfalla in Sweden, and Vadnais Heights and Shakopee in Minnesota, USA. In 2002 ADC has closed 41 facilities, outsourced some manufacturing operations, and is cutting staffing from 12,500 by about 26% to 9,200.

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