Taiwan Semiconductor Manufacturer Takes Cost Saving Measures

With the financial crisis spreading to more Chinese technology businesses, Taiwan Semiconductor Manufacturing Company has announced plans to implement unpaid holidays from December 2008 to avoid staff cuts.

A spokesperson from TSMC says that from December 2008, employees who work in TSMC's manufacturing departments will take as many as five unpaid days each month and those who work in other departments will take one unpaid day each week staring from January 2009. At the same time, the transport allowance that was previously paid to the company's managing staff will also be canceled.

Dr. Rick Tsai, CEO of TSMC, said in a video address to employees that the company's revenue experienced a sharp decline from the beginning of the fourth quarter and the situation will last for a while. The operation of TSMC, including capacity utilization, revenue and profit, will be greatly affected. Tsai says the company needs to try its best to cut costs while protecting employees' jobs.

In addition, TSMC says it will cut capital expenditures by 20% in 2009, compared with its USD1.8 billion costs in the year 2008.

According to the financial forecast released by TSMC on December 1, 2008 the company reduced its revenue expectation for the fourth quarter of 2008 from between NTD69 billion and NTD71 billion to between NTD63 billion and NTD65 billion, a decrease of about 30% compared with the third quarter of 2008. In the first three quarters of 2008, TSMC made accumulated net profit of NTD87.49 billion, a year-on-year increase of 17.1%.

Last week, Flextronics, one of the world's leading electronics manufacturing services providers, said it would cut 30% of the jobs in its Beijing office in addition to closing its research and development department in Beijing.

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