Motorola plans to close more semiconductor fabrication plants this year.
The company currently manufactures the G4 semiconductors employed by Apple in its Power Mac G4, PowerBook G4 and iMac products. Apple relies on two partners for its processors, IBM and Motorola. Together, these three companies constitute the AIM (Apple, IBM, Motorola) Alliance.
Motorola's plans to reduce semiconductor manufacturing capacity were revealed yesterday to analysts by president and chief operating officer, Ed Breen. It's part of an plan to slash costs in an attempt to return the company to profitability. The company will continue to innovate, hinted Breen.
"We're going to take the bricks and mortar out," Breen said. After cutting its roster of chip-fabrication plants last year from 18 to 14, Motorola now plans to cut that number to eight, he said.
Breen criticised the company's managerial history and promised the changes would be uncompromising.
"The company's overhead and minimum revenue for break-even was just out of whack," Breen said. "Motorola never made good money, even when it made good money."
Non-core businesses will be eliminated and management will be reduced. "Nothing is going to be sacred around the company," he said.
Motorola's five core businesses now are mobile handsets, service-provider infrastructure, semiconductors, broadband equipment and commercial and public-safety networks.
In semiconductors, Motorola is moving toward an "asset-light" strategy to keep costs down and boost margins, which have been at half the industry average, Breen said. The company is looking for deals to outsource the manufacturing of its chips.