National Semiconductor fights for survival

National Semiconductor fights for survival

National Semiconductor is fighting to maintain local market relevance after rationalising its business worldwide and an on-again-off-again commitment to Australia.

NSC has pulled out of the PC processor market and, since May 1995, has cut staff numbers worldwide from 22,000 to 11,000.

These tough decisions are a move by NSC to redirect its efforts from PC processor manufacturing to the high-growth semiconductor applications market, which GartnerGroup predicts will be worth $US250 billion worldwide by 2003.

According to Gartner in a recent report, the underlying megatrends driving this market are the digital home, global communications, personal mobility and e-commerce.

NSC recognised the potential in this market three years ago when it started focusing on producing technology for the information appliance market which now represents 10 per cent of its sales revenue. At that stage NSC was still committed to the PC chip manufacturing business attracted by the size of the market.

However, shocking financial results for the last fiscal year provided the incentive to get out of the PC processor business.

NSC reported a net loss of $US1.009 billion for the year ending May 1999 with net sales dropping from $US2.625 billion in May 1995 to $US1.956 billion in May of this year.

NSC's annual report revealed the company invested $US471.3 million in R&D for the year ending May 1999 with a portion used to continue researching and developing the PC on a chip family of products called the Geode. The Geode chip is cornerstone technology used to develop interactive set-top boxes.

In the report, NSC described the Geode SC1400 product as a chip with a `x86-based Media GX processor core and MPEG video decompression plus input and output for TV and peripherals, all on the one piece of silicon'.

However, a spokesperson for Advanced Component Distributors, Vic Hillas, said the processor manufacturer is up against tough competitors Texas Instruments, Philips and Motorola in the market. Hillas added that NSC's products are priced right and are of comparable quality to its competitors.

He noted that NSC had a strong presence in Australia during the late 70s when it manufactured out of Bayswater, South Australia but was later bought out by Hardies. Since then he has witnessed a chequered local history with the company.

The on and off attention by the US-based manufacturer in its Australian operations could have contributed to its current lacklustre local status.

John Bevilacqua, NSC Australia director, was defensive about his company's recent financial history and was not forthcoming about the company's plans for the Australian market.

Kuruna Karan, Asia-Pacific NSC business development manager for distributor Avnet Pacific, shed more light on NSC's market activities.

`NSC is getting its act together. We have seen some revenue growth in recent times.' Karan added that NSC is the only company which can provide a total solution for Information Appliance manufacturers.

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