12,000 face temporary layoffs at Toshiba


Along with chips, Toshiba is a leading maker of laptop computers

By Alex Frew McMillan
CNN Hong Kong

TOKYO, Japan (CNN) -- Toshiba Corp. will temporarily lay off 12,000 workers at its chip plants in Japan.

The company, Japan's biggest chipmaker and the world No. 2 behind Intel, will shut three of its four Japanese chip plants for a few days in November and December.

A spokesman told CNN Wednesday that the move was necessary to cut down on inventories. Reducing stock saves storage costs and prevents a glut on the market.

Toshiba will also save on energy and a little bit of labor costs. Workers will get 90 percent of their normal pay for the days they're furloughed.

"Basically the demand for chips is very weak at this moment," the spokesman said. "The current situation is very tough for semiconductors."

Toshiba is on track for its worst year yet, in what the chip industry calls its worst downturn ever.

Three plants to close for several days

Toshiba's plant at Yokkaichi will close for four days, the plant at Oita will shut down for three days and the plant at Himeji will be idle for two days.

Its factory at Kitakyushu will stay open as normal. While not strong, demand for chips from that plant has held up better than most, the spokesman said.

The temporary layoffs cover around 6 percent of Toshiba's total workforce of 188,000. The move affects just under half its roughly 30,000 chip-making employees around the world.

Toshiba is already eliminating 19,000 jobs permanently in an effort to cut costs. It said in October it would speed those cuts up to complete them by March next year instead of March 2004.

It lost 123 billion yen ($1.01 billion) in the first half of the business year. Toshiba has forecast a total net loss of 200 billion yen ($1.65 billion) for the fiscal year, which runs through next March.

Tokyo-based Toshiba also makes laptop computers, where it pushes for the No. 1 spot worldwide. It has a raft of other products, including cell phones, industrial machinery, X-rays, microwaves and DVD players.

Japanese chipmakers facing tough times

Out of Japan's Big Five chipmakers, only Mitsubishi Electric is currently making a profit, and a scant one at that. Analysts say even it will do well to make it into the black for the year.

Combined, the five -- Toshiba, Fujitsu, NEC, Hitachi and Mitsubishi Electric -- forecast a net loss of 888 billion yen ($7.3 billion).

Toshiba stock was down 1.8 percent at 490 yen on Wednesday afternoon.