Panasonic, Qimonda cuts hit M'sian electronics

At stake is the livelihood of nearly 2,000 employees at the Malaysian manufacturing plants operated by the Japanese electronics company and German chipmaker.

A correction was made to this story. Read below for details.

MALAYSIA--Trouble is mounting for the local electronics sector this week as Panasonic announced layoffs at its Malaysian operations, and Qimonda filed for bankruptcy--putting the livelihood of 1,100 workers in its local plant at risk.

Japanese electronics giant Panasonic said Wednesday it will cut 560 jobs in Asia due to the closure of two plants in the region. Some 500 workers at the electronics-parts plant in Malacca, Malaysia, will be laid off, while 60 employees at the Philippines battery factory will also lose their jobs, spokesperson Akira Kadota said in an Associated Press report.

Kadota also confirmed the company's two electronic-parts plants in the central Malaysian state of Selangor, will merge into one by September. He could not give the number of workers stationed at the Selangor plants, but said the move will not result in job losses.

Panasonic's Malacca plant, which makes film capacitors used in mobile phones, will be closed in March, according to Japanese business daily Nikkei. In November, Panasonic slashed its net profit forecast by 90 percent to just 30 billion yen (US$336 million). But Nikkei reported the company will likely plunge into the red as sales continued to deteriorate globally. Profits were also hit by a surging yen, eroding the overseas income of Japanese exporters.

The announcement follows Intel's statement last week that it will be closing five manufacturing facilities worldwide, including two existing assembly test facilities in Penang, Malaysia. The U.S. chipmaker said the plans were part of its move to restructure some manufacturing operations and align its manufacturing capacity to current market conditions. Closing the Penang plants would affect over 1,000 of Intel's 10,000-strong Malaysian workforce.

Loo Cheng Cheng, Intel's corporate affairs manager in Penang, was reported to say the company would offer affected workers comparable positions in its other plants in Penang and Kulim, in the neighboring state of Kedah.

Meanwhile, the fate of workers at the factory of Germany's Qimonda in Senai, Johor, hangs in the balance. The struggling chipmaker, which spent the past few months seeking bailouts from the German government, filed for bankruptcy in a Munich court Friday, blaming financing issues and a drop in memory chip prices. The company, which has 12,200 employees and controls about 10 percent of the global DRAM market, also has operations in Germany, Portugal, the United States and Taiwan.

In a Jan. 26 press statement on its Web site, the company said all Qimonda locations would continue with production "for the time being".

Preliminary insolvency administrator, Michael Jaffe, said in the statement: "It is still too early to make a well-founded assessment." Jaffe is assessing Qimonda's liquidity in Germany and abroad, and evaluating options to continue business "with an open mind", according to the statement. "Contributions from financially strong investors are required to reach a sustainable solution," he added.

Qimonda, a subsidiary of German chipmaker Infineon, was hailed by Malaysian business circles as a "big catch" when it announced some years back that it would be setting up operations in Malaysia.

The deepening global economic slump is beginning to bite the country's economy where, according to the Malaysian Employers Federation (MEF), over 10,000 Malaysians have lost their jobs since Jan. 1.

MEF executive director, Shamsuddin Bardan, said Wednesday that more are expected to be jobless in the days ahead as companies, particularly in the manufacturing sector, struggle to keep their businesses afloat.

Shamsuddin told local news agency Bernama the situation is more critical, given that almost 600,000 new job seekers enter the local job market every year, and appealed to the Malaysian government to promptly release a second economic stimulus package to alleviate the situation.

The government recently announced a 7 billion ringgit (US$1.95 billion) stimulus package, which was deemed by detractors to be inadequate given the severity of the economic downturn.

According to the MEF, some 200,000 factory workers may be laid off this year, mostly from the electrical and electronics sector.

Lee Min Keong is a freelance IT writer in Malaysia.

Correction: This article incorrectly stated that Qimonda's plant was located in Malacca. While the chipmaker did have a plant in Malacca, a company spokesperson has confirmed that this facility was shut down mid-2008 and a number of employeees were relocated to Qimonda's current plant in Senai, Johor Bahru.
The story has been updated. We apologize for the error.

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