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RF Micro Devices cuts capex to US$20 million for 2009
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The rapid reduction in demand for semiconductors would seem to be impacting all areas of the both the mainstream and specialist fields of the industry as a growing list of companies reduce spending and undertake other far reaching cost reduction strategies. Compound semiconductor manufacturer, RF Micro Devices has announced plans to cut capital spending to the bone in 2009, with a revised budget of only US$20 million.
Although many specialist chip manufacturers have very little capital spending requirements compared to mainstream CMOS chip manufacturers, RF Micro did spend US$113 million on CapEx in the last 12 months.
RF Micro’s move to preserve cash via slashing CapEx follows the news that ON Semiconductor was reducing capital spending to between US$50-US$60 million in 2009, compared to previous guidance of between US$130-US$140 million.
Bob Bruggeworth, President and CEO of RFMD, said in a statement that, "RFMD today is flexible and agile, as evidenced by our ability to quickly decrease capital expenditures, rationalize our supply chain and reduce expenses to match our current demand environment."
Although reductions in capital spending are to be expected in a downturn to preserve cash, they can also indicate that without the cuts, inventories will climb rapidly as demand evaporates. There would seem to be growing concern amongst chip manufacturers large and small that demand is rapidly fading away and potentially creating an inventory problem on the scale of the 2001 downturn.