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Monday, 20 August, 2001, 05:45 GMT 06:45 UK
Fujitsu to cut 16,400 jobs
Fujitsu notebook computers
Fujitsu: Joining the ranks of tech slump victims
Japanese chip and PC giant Fujitsu has unveiled a restructuring plan which will see 16,400 jobs go, two-thirds of them outside Japan, to counteract the global slump in demand for technology.

With 11,400 job losses in overseas operations, the cuts have implications for ICL, Fujitsu's UK subsidiary which was once the country's most important computer maker.

A spokesman for ICL, which has 11,000 of its 19,200 based in the UK, told BBC News Online 900 jobs will be lost at ICL and Fujitsu's DMR US subsidiary but could not be more specific.

Analysts believe another 220 could be at risk at Fujitsu Telecommunications' operations in Birmingham in the UK.

The cuts follow the company's 55bn yen ($1.8bn, 1.25bn) loss for the quarter to June this year, and its warning that the full year could see a loss as big as 220bn yen.

With no recovery foreseen until next year at the earliest, the job cuts will probably mean Fujitsu pulls out of chip manufacturing in the US.

"Fujitsu want to concentrate on its software and service business and will rationalise its manufacturing division. Only 5% of the cuts will affect the software business of which ICL is part," ICL's spokesman said.

Markets cheer job losses

Analysts cheered the company's decision to slash its workforce.

"Fujitsu seems to be moving in the right direction in its apparent attempt to cut costs and maintain or raise their level of earnings," said Kunihiro Hatae, general manager at Tokai Tokyo Securities' equities trading division.

The markets, too, were appreciative. Against a falling wider market and weakness for chip stocks, Fujitsu shares were up 0.66% at 1,219 yen by mid-afternoon.

End of an era

ICL has under performed in recent years, losing its chief executive in the dot.com slump last year and repeatedly shelving plans for a float.

In June it was announced that ICL, one of the best known names in the UK computer industry, will disappear by March next year, to be rebranded as Fujitsu.

Also plans for a 5bn float were abandoned and its accounts will now be fully merged with those of its Japanese parent.

ICL, the third-largest software and IT services supplier in the country, designs, builds and operates computer systems and software applications for clients like Vodafone, BT, NTL, WHSmith and the BBC.

Downturn bites

"Because of a global downturn of corporate IT capital investment and a continued slump in individual demand, the market situation is severe," the company said.

The company has suffered like its peers from slowing demand for chips and other components, and from the effect of corporations slashing IT spending.

Flash memory for mobile phones has been an area of business particularly hard hit amid the sharp slowdown in handset demand.

Earlier in August fellow Japanese tech powerhouse Toshiba decided to close a semiconductor line in Japan and is considering speeding up a three-year restructuring plan.

And last week US chipmaker General Semiconductor announced it will close its plant in Ireland and move production to China and Taiwan, shedding one eighth of its workforce.

Last month, Fujitsu announced a plan to offer 9,000 workers over the age of 45 a voluntary early retirement package.

The group has suspended production at three plants in Japan and shut down Fujitsu AMD Semiconductor Limited, its joint venture with Advanced Micro Devices (AMD).

Fujitsu is also reviewing its US flash memory plant in Oregon, which it shares with ADM.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Charles Scanlon
"The current slump in demand is pushing the economy back into recession"
Mizuho International's Seijiro Takeshita
"They have changed their organisational structure"
Peter Skyte, national secretary of the MSF
"We're facing worldwide job cuts"
See also:

27 Jul 01 | Business
Fujitsu and NEC profits slide
27 Jul 01 | Scotland
NEC confirms job cuts
26 Jul 01 | Business
Job cuts top 50,000
12 Jul 01 | Business
Fujitsu: Profits under pressure
11 Jul 01 | Business
Yahoo boost for tech investors
10 Jul 01 | Business
Compaq cuts jobs and sales forecast
03 May 01 | Business
PC trade surges on company demand
20 Feb 01 | Business
Tech slump spreads to Japan
20 Apr 01 | Business
Dell becomes world's top PC maker
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