Winbond Electronics Corporation Announces Financial Results for First Three Quarters of 2001 and Institutes New Cost Cutting Measures Aimed at Increasing Competitiveness

(Taipei News) Winbond Electronic Corporation today announced financial results for the first three quarters of 2001. The Company also announced a series of cost cutting measures aimed at increasing the Company's competitiveness. Due to a continued economic slowdown during the third quarter, and a sustained downward trend in DRAM pricing, revenue for the first three quarters of 2001 was NT $18.180 billion. After tax net loss was NT $6.543 billion and the Company's net loss per share was NT $1.48.

While Winbond continues to see positive signs for long-term product development, a number of factors have, in the short term, caused the Company to adopt a more conservative approach to controlling operational costs. These factors include a continued uncertain outlook for the economy worldwide and the Sept. 11, 2001 tragedy that occurred in the United States. The Corporation's strategic goals remain constant; to continue to gain market share over its competitors, increase competitiveness, and position Winbond as a worldwide leader in the semiconductor industry. In order to remain on track and aggressively pursue its objectives, Winbond has decided to institute a number of cost-cutting measures aimed at decreasing costs, maintaining research and development efforts and, in the short-term, re-establishing a positive cash flow for the Company.

After prudent consideration, Winbond management has decided to close its 5-inch FAB 1. This fab, which is considered obsolete for advanced future production, will close at the end of 2002. In addition, employees from FAB 1 will be transferred to FABs 2, 4, 5 as well as other related departments. Production from Fab 1 shall be transferred to the Company's 6-inch FAB 2. FAB 1 will then be put up for sale.

Other cost cutting measures include executive management taking a decrease in salary; mandatory vacation assignments and other Human Resources related measures that are all designed to significantly lower operational costs, which is expected to reduce its total personnel costs by approximately 15 percent.

Winbond noted that the company would stop pursuing advanced development of 0.11micron stack type DRAM technology. Nevertheless, by fully achieving manufacturing capability for 0.13 micron technology process, the company will fulfill customers' requirements in products and services for the next three years. Future product development for memory will focus on specific application DRAM markets and Flash memory products.

The closing of 5-inch FAB, along with a reduction in workforce and the Company's previously announced revised DRAM manufacturing development strategy, should save the Company an estimated NT $2 billion in expenses in 2002. In spite of these cost cutting measures, the Company expects to move forward with crucial plans and projects by more efficiently utilizing limited resources.

The Company will continue to aggressively invest in new products and new technology research and development and remains committed to its long-term goals of increasing market share, enhancing competitiveness and positioning Winbond as a worldwide leader in the semiconductor industry.

    Wilson Wen
    Vice President of Administrative Center

News Liaison
    Mike Liu
    Deputy Director

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