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According to media reports around 1,500 of the job cuts have already been made in IBM's microelectronics business, a unit manufactures and distributes memory, storage networking and PowerPC semiconductors. The company said it will give full details of workforce reductions when its second-quarter results are announced in July.
Speaking to analysts on Tuesday, the company's chief financial officer John Joyce said IBM was looking to realign its microelectronics division, putting a greater focus on technology design and advanced foundry services. He also confirmed that the company is taking "workforce and related actions" in other parts of its business, but details will not be available until July.
IBM is one of Ireland's largest IT employers with 4,200 workers. The company said most staff affected by the cuts have already been notified, and the cuts are due to be complete by the end of the second quarter. A spokesperson for IBM in Ireland said no cuts were anticipated here, and reports say most of the 1,500 layoffs are being made in Vermont in the US.
"These efficiencies are intended to go beyond addressing the current weakness in the market," Joyce told analysts. "Our objectives are lower product costs and better expense ratios than our competitors, over the long run."
IBM will take most of the massive pre-tax charge during the second quarter; this includes costs for job cuts as well as costs related to its exit from the hard disk drive business. The company announced a major initiative on Monday to transfer its hard disk business to Hitachi, including 18,000 IBM employees and IBM intellectual property connected to this business. Hitachi is to pay USD2.05 billion to IBM and will wholly own the hard disk business within three years.
IBM currently employees 318,000 people globally but is eager to pare down that number as it faces down a prolonged, unprecedented downturn in corporate IT spending. The company's new chief executive officer Sam Palmisano has indicated repeatedly this year that cuts would be needed, and Reuters continues to quote sources suggesting that total cuts, when complete, could amount to more than 9,500 people.
Also speaking to analysts on Tuesday, the company's Senior Vice President and Group Executive John E. Kelly III was at pains to stress that IBM would not exit the semiconductor business altogether.
"We are serious about our chip business and we're in it to stay," Kelly said. "As Sam Palmisano indicated in his comments to you in New York last month, 'We love this business.' And, going forward, we'll continue to make the investments in research, development and manufacturing capacity to succeed."
"At the same time, we recognise the semiconductor industry is going to emerge from this unprecedented downturn looking very different than ever before," he added.
The company's re-organised microelectronics division will increase its focus on areas like custom-chip design and manufacturing and will also add new technology design services.
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