Broadcom to close baseband chip unit

Micro Electronics

by CBR Staff Writer| 23 July 2014

It also plans to terminate some contract and cut 2,250 more jobs; on the top of 250 jobs it has already removed.

American chip maker Broadcom has announced that it will close its cellular baseband chip unit and cut 2,500 jobs.

Last month the company revealed it would either sell or close the unit, which makes baseband chips for mobile phones saying that it is losing money due to stiff competition.

The company has, however, decided to wind down the operation and consolidate its operations from 18 locations.

Broadcom president and CEO, Scott McGregor, said: "We recently made the difficult, but prudent decision to wind down our cellular baseband business and focus on the Broadband, Connectivity and Infrastructure markets.

"As a result, we will be a stronger company, as gross margins, profitability and cash flows will noticeably improve, providing an opportunity to return more capital to our shareholders."

It also plans to terminate some contracts and cut 2,250 more jobs; on the top of 250 jobs it has already removed as part its restructuring measures.

Broadcom could face $225m additional restructuring charges over the next 12 months, but expects that ditching the business could help it save about $700m per year.

During the second quarter, the company reported a loss of $1m compared to a year-earlier loss of $251m

Excluding asset write-downs, mostly related to the cellular baseband business, and other items, adjusted earnings fell to 65 cents from adjusted earnings of 70 cents.

Revenue during the quarter dropped 2.3% to $2.04bn compared to $2.09bn it reported for the second quarter of 2013.

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