Philips was due to brief analysts in Amsterdam and according to the report van Houten told them that half the savings would come from reducing manufacturing costs at its European wafer fabs and in its Asian IC assembly base. About 75 million euros (about $90 million) would be saved on selling, general and administrative (SG&A) expenses and a further 50 million euros (about $60 million) would be saved by improving R&D effectiveness, the report quoted van Houten saying.

It was not stated explicitly whether Philips’ semiconductor business renewal program would result in job cuts.

The goal of the program is to achieve a consistent income from operations margin of between 5 and 15 percent through the business cycles of semiconductor industry, Philips said.

The program's ongoing measures include simplifying the organization and pruning non-performing activities, designing the organization around customers in four key segments; automotive and identification, mobile phone and personal entertainment, digital home and multimarket semiconductors.

“We're confident these measures will help us improve our income from operations margin by 5 percentage points through the semiconductor cycle by the end of 2007,” van Houten said.

Philips said it is expecting sequential growth in the third quarter to be approximately 5 percent in U.S. dollar terms and for this to be followed by mid-single digit sequential growth in dollar terms in the fourth quarter.

By: DocMemory
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