Chip maker Tower Semiconductor (Nasdaq: TSEM; TASE: TSEM) is laying off employees, but fewer than planned. The company announced today that 70 employees would have to leave the company, as part of its adjustment of its workforce to manpower needs. The company will still have 1,300 employees. "With this measure, the company has completed the reduction in its workforce," stated Tower.
Tower also plans to consolidate divisions in its two production facilities, Fab 1 and Fab 2. The company said that it was undertaking other streamlining and savings measures. The company undoubtedly hopes that the clouds of uncertainty that have hung over its employees, who knew that layoffs were inevitable soon, will disperse now that the lay-offs have been completed.
Nevertheless, Tower did not say that no additional layoffs might occur in future. Minister of Industry Trade and Labor Ehud Olmert announced yesterday that Tower's shareholders "responded to his request to review plans for laying off 150 employees at the company. They promised that if it became necessary to carry out additional layoffs in future, the measure would be coordinated with the ministry."
Tower also announced today that its board had approved the company's business plan for 2005, which would lead to a positive EBITDA (earnings before interest, taxes, depreciation and amortization) in the second half of the year.
How does Tower intend to achieve this? That is not clear at this time, since the company did not detail its plan. It merely said, "Streamlining in operations and other measures will save costs." Tower said that it expected increased demand in the second half of 2005.
$1.3 billion has been invested in Tower's Fab 2 in Migdal Ha'emek to date. It is now obvious that the company will need additional investment, and customers.
An announcement by the Ministry of Industry, Trade and Labor yesterday indicated that Tower's shareholders had promised to invest up to an additional $30 million in the company this year, subject to the banks granting matching credit, and that they would make orders from Tower in line with the original work plan.
Published by Globes [online], Israel business news - www.globes.co.il - on March 29, 2005