February 20, 2003 - National Semiconductor Corporation (NYSE:NSM) today announced a series of strategic profit-improvement actions that are designed to accelerate the company's return on investments and streamline its cost structure.
As a key part of this effort to increase its return on R & D spending, the company is seeking to sell its Information Appliance unit, consisting primarily of the Geode™ family of products, as well as its cellular baseband business. The company has engaged outside advisers to assist in the process. In the meantime, National will continue to operate these businesses and support customer programs.
"These businesses have an excellent future. But at this point, to achieve that future requires more capital than we are prepared to invest," said Brian L. Halla, National's chairman, president and CEO. "We have cast our nets far and wide, but in this challenging environment we are prioritizing R&D spending on product areas that drive higher returns sooner."
National has also entered into a new long-term technology and manufacturing agreement with Taiwan Semiconductor Manufacturing Corporation (TSMC), the world leader in CMOS wafer foundry services. The strategic agreement establishes TSMC as National's supplier of wafers for products with feature sizes at and below 0.15 micron.
"These are strategic actions specifically aimed at improving National's performance and providing faster returns to our shareholders," Halla said. "We are continuing to leverage our analog strengths in key growth markets, such as wireless handsets and flat-panel displays, where our power management, radio frequency, amplifier, audio and display products continue to gain momentum and increase our dollar content per unit. With TSMC as our foundry partner, National will continue to be able to offer products at leading edge line geometries without having to commit the huge capital required for a 300 mm fab."
In addition, the company will realign some manufacturing, product development and support personnel as part of its overall plan to streamline National's cost structure. This will immediately reduce approximately 500 positions from the company's worldwide workforce of 10,000.
From a financial perspective, the initial actions will result in savings of approximately $15 million per quarter starting in the fourth quarter, which ends May 25, 2003. The savings will increase over future quarters as the company completes all aspects of this plan. In connection with these actions, National will incur charges of approximately $35 to $45 million in the third quarter, which ends February 23, 2003, primarily for severances and impairment of certain assets.
National Semiconductor will report financial results for the third quarter of its 2003 fiscal year on March 6, 2003. Additional information about these initiatives will be discussed during the third quarter conference call.
About National Semiconductor
National Semiconductor is the premier analog company driving the information age. Combining real-world analog and state-of-the-art digital technology, the company is focused on analog-based semiconductor products, which include stand-alone devices and subsystems in the areas of power management, imaging, display drivers, audio, amplifiers and data conversion. The company targets key markets such as wireless, displays, information infrastructure and a broad range of portable applications. With headquarters in Santa Clara, California, National reported sales of $1.5 billion for its most recent fiscal year. Additional company and product information is available on the World Wide Web at www.national.com.
