Agere Systems to shut down fab unit

BANGALORE: Reeling from a huge revenue loss of $67 million last quarter, Pennsylvania, US based telecom chip design company Agere Systems plans to tide over such losses by becoming a 'fabless' company in a couple of years. The company's VP of design platform technology Jonathan Fields said, "We plan to close our wafer fabrication plant in Orlando, Florida by 2005 end. We will second source our requirements from other manufacturers. We are right now focused on three main areas - telecom, storage and delivery."






In 2002, the company exited the optoelectronics business by selling off its fab unit and business to TriQuent Semiconductor for $40 million. Describing the reasons for the poor results in 2004 when the company reported $90 million in total losses, Fields said that it was the result of the legacy Agere inherited from its parent company Lucent Technologies, which itself fared badly in the downturn of 2001. Agere Systems was formed in 2001 when Lucent spun off its optoelectronics components and integrated circuits divisions.





He added that owing to the company losses, the R&D spend had reduced over the years. The company's revenues stood at $1.7 billion last year.





Agere Systems recently shifted to a new bigger facility in Bangalore that currently houses 250 engineers involved in software development (tools, reference design, applications and firmware) and semiconductor design (chip and SoC related design, layout and verification). The company has made an investment of $25 million into the center and hopes to ramp up the headcount to 400. Globally, Agere Systems has 2,300 engineers on its rolls.





Fields said that the decision to grow the Bangalore center did not mean that it was looking to India because of cost arbitrage factor. "We are here because of the immense talent. It is good to have a critical mass of engineering talent here. We are also keen on providing support and meeting the needs of our customers," he said.