Freescale boss predicts more doom

Freescale Semiconductor boss chief executive Gregg Lowe sees more trials and tribulations for the chip industry and admits that any cunning plans he has to save his company will not pay off until 2015.

Lowe left Texas Instruments in June to lead Freescale and has embarked on restructuring.  Even before the economic downturn, Freescale had not been doing well and has made a loss for nine of the past 10 years.

Talking to Reuters, Lowe said if fourth-quarter global chip revenue falls year over year, as expected, it would mark a sixth straight quarter of year-on-year declines and match the longest market decline seen in 25 years.

He said that history would say that something which has declined for so long would probably go up eventually but there is no evidence for that.

Chips used in cars and trucks account for 40 percent of Freescale’s revenue. Its semiconductors are also used in industrial equipment, mobile phones and consumer products.

Under Lowe, Freescale has merged manufacturing operations under a single management group to cut costs. He is refocusing R&D resources, which represent almost a fifth of revenue, product areas in the auto industry as well as microcontrollers and radio frequency chips.

He thinks that the company is trying to do too many things and as it narrows its focus it can spend that money much more efficiently.

However, the timetable for any success is a long way into the future.

Lowe said that in 2013 Freescale will start the strategy and in 2014, there should be some benefits.  He thinks that by 2015 Freescale will start regaining share.

Freescale was taken private in 2006 for $17.6 billion in the biggest leveraged buyout of a technology company on record. But the company is left with lots of debt.

It has cut just under five percent of its work force this year but plans to hire a similar number of people in 2013, probably in China.