Jobs go at UK chip developer

The slump in the semiconductor business means potential customers have deferred important deals

The deep slump in the semiconductor industry has forced UK-based ARC International to lay off 20 percent of staff.

The chip developer announced on Wednesday that around 40 staff would be lost worldwide. Warning that it could not forecast when the semiconductor market would recover, ARC said that the redundancies would cost around £800,000. It is also expecting to spend up to £3.5m restructuring its business.

In a statement, ARC insisted that the future was still positive. "A review of the cost base of the business has identified opportunities for productivity improvement and we are implementing a substantial cost reduction programme to maintain our progress towards profitability," it said.

It is not yet clear how many jobs will be lost in the UK. ARC was not available for comment at the time of writing.

A total of 300 people are employed globally by ARC, of which 168 work at its headquarters in Elstree, Hertfordshire. Its "tangent" processor is used in digital cameras, network processors for high performance switching, cordless telephones and disk drives.

ARC recently announced that a number of Bluetooth manufacturers would be using its chips in their forthcoming products. However, Bluetooth has also been hit by delays -- Psion decided earlier this month to suspend work on its Bluetooth-enabled PDA.

Wednesday's announcement illustrates the damaging effect of the downturn in the technology sector, combined with the US economic slowdown -- which some analysts fear has spread to Europe. On Tuesday NEC cut 600 jobs at a semiconductor factory in Scotland, while Intel warned last month that its income for the last quarter had fallen by 76 percent compared to the year before.

ARC made a pre-tax loss of £9.4m for the second quarter of 2001, compared to a loss of £4.3m for the same period a year before. On the positive side, sales were up by over 40 percent to £3.5m. ARC blamed the increased losses on potential customers delaying licence agreements.

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