The job cuts will occur between now and Q2 and will mostly be made at ASML's Veldhoven, Netherlands, headquarters, its manufacturing site in Wilton, Connecticut, and at its training site in Tempe, Arizona, which will be closed, the company said.
"Never before have we witnessed such a sharp and sudden fall-off in lithography system demand, triggered by an unprecedented mix of falling end-demand for semiconductors, weak memory prices and restricted access to capital for our customers," said Eric Meurice, president and CEO of ASML, in a statement at the end of last week.
"This steep decline in our business activity is forcing us to adjust our organization in order to lower our cost base significantly by using the full flexibility of our business model, while maintaining our important strategic investments in research and development. Although painful for our stakeholders in the short term, the current effort offers ASML an opportunity to emerge healthier and fundamentally stronger when the overall semiconductor market recovers," Meurice said.
ASML said it further plans to shut down production facilities for a total of four weeks, spread over Q1 and Q2 of 2009, as a cost-cutting effort. ASML said it will also reduce discretionary expenses, including contracted activities, salary raises, and unspecified miscellaneous consumption.
Moreover, ASML said that due to the anticipated lower level of sales volume in the coming year and the introduction of new, more cost-competitive, scanner models, the company will take impairment charges on certain inventories and assets.
All in all, ASML expects to incur costs between $167 million and $208 million (120 million Euro and 150 million Euro) on the actions, the majority of which it will face in the current quarter.
The implementation of the actions, in addition to earlier actions taken within a six-month old program to improve overall efficiency, will result in a cost reduction of more than $69 million (50 million Euro) per quarter by Q1 2009, ASML estimated.
ASML also lowered its Q4 guidance in the statement, saying it now expects sales in to be between $625 million and $694 million (450 million Euro and 500 million Euro), compared with the guidance it issued on October 15 for sales of around $736 million (530 million Euro).
The company said that a "sharp decline" in new order intake, in addition to requests from customers to postpone backlog system deliveries, will translate into substantially lower sales in the first six months of 2009. The revised guidance calls for Q1 sales between $250 million and 4347 million (180 million Euro and 250 million Euro).
ASML is slated to disclose full Q4 2008 results and Q1 2009 guidance on January 15, 2009.
Source : ElectronicsWeekly
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
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