Siemens Companies to Slash More Than 5,000 Jobs

Jul 26 2001

Chipmaker Infineon and electronic-component maker Epcos announced Thursday that they will cut a total of 5,750 jobs, after a decline in demand and falling prices have brought sales and earnings down in the past quarter. Parent company Siemens, the German electronics and engineering giant, said Wednesday that it might raise its own tally of layoffs beyond the 9,700 it has already announced earlier this year.

Epcos was the last of the three companies to announce quarterly results. Like Infineon and Siemens, it was hit by the collapse of the mobile phone market. Epcos’ sales fell 11 percent in the quarter ended June 30, its fiscal third, to $433 million . Unlike Siemens and Infineon, Epcos managed to close in the black, though net income was down 67 percent, to $19 million .

Infineon and Epcos were spun off from Siemens and brought public last year. Siemens still holds a 51 percent stake in Infineon and a 12.5 percent stake in Epcos. It is a major customer for both, and Infineon is a major customer for Epcos, as well. Other big customers for Epcos and Infineon include mobile phone producers such as Ericsson or Nokia, who have both announced job cuts of their own.

Siemens currently employs 460,000 people worldwide, Infineon 29,000 and Epcos 13,000. In March, Siemens said it would cut 9,700 jobs, mainly in its ICN and ICM divisions, which produce fixed and mobile telecom infrastructure and consumer products.

Apparently, the cuts have been insufficient. Wednesday, Siemens reported a $427 million loss on sales of $17.7 billion in the latest quarter. Siemens CEO Heinrich von Pierer said he’d cut more jobs in the loss-making units but didn’t give any details. The first firing happened right away, when Von Pierer let go of the head of his network unit ICN, Roland Koch.

On Monday, Infineon reported a loss of $324 million on sales of $1.12 billion in the same period. Infineon said it will save $880 million by cutting 5,000 jobs in the coming 18 months.

Epcos has already fired 1,400 employees this year, bringing the total job losses, including Thursday’s announcement, to almost 17,000. Although the companies are based in Munich, Germany, the cuts will happen across the globe. Epcos said it may "[step up and extend] production to low-wage countries" to cut further cost.

Analysts’ reactions to the announced layoffs were mixed. While some greeted the cost savings with pleasure, others noted that Infineon and Epcos might suffer from staff shortages when the market recovers. Infineon also said it will open a new chip plant near the city of Dresden at the end of the year.

Siemens shares jumped 4 percent to 59.80 euros in Frankfurt in the afternoon. Infineon also rose, by 2 percent to 27.69 euros. Epcos fell 4 percent to 48.57 euros.