The computer industry, which until now has sailed above the recession, is showing signs of softness with scattered layoffs, dismissals, shorter workweeks and longer vacations among component manufacturers.
Most of the cutbacks in the work force have been aimed at keeping inventory from building up rather than reflecting an absolute decline in demand, and industry officials expect business to pick up again soon as prices fall.
So far the recession's impact on the manufacturers of semiconductors and other computer components has been almost negligible compared with the battering manufacturing industries such as autos and steel have taken. But an increasing number of aggressively competitive Japanese firms are moving into the market, and American manufacturers may make while the U.S. industry is a weakened condition.
Texas Instruments announced two weeks ago that it was reducing its work force by about 2,800 jobs, or 3 percent. Reduced work schedules were already in effect for approximately 10 percent of the work force.
More than other semiconductor manufacturers, Texas Instruments supplied parts for the consumer market, which has been weakened by the recession. At the same time, it announced the cutback in the work force, the company also said it is phasing out its digital watch business. w
TI blamed continuing high interest rates in the United States, excess capacity amoung producers of semiconductors and the impact of the recession on European markets for the weakened demand for semiconductor, consumer and distributed computing products.
"There are soft spots," said Warren Davis of the Semiconductor Industries Association. But Davis said that demand for computers for lease and sale remain relatively strong. "The [semiconductor] companies that are faring the best are those that are not consumer but are in the computer, telecommunications and military markets."
Advanced Micro Devices of California has imposed a mandatory vacation period from June 29 to July 12. "Sales in the semiconductor industry have not necessarily grown," said spokesman Elliott Sopkin. "Unit volume has grown but not at the rate we had expected."
The mandatory vacation affects about 4,000 workers in California and another 350 in Austin, Tex. Workers who don't have vacations or who have made plans for other weeks can borrow against future vacations to insure that their pay continues. The company has pledged no layoffs.
Mostek Corp., the world's largest manufacturer of 16K RAMs, the big memory circuits that sell by the millions to the computer industry, has laid off approximately 400 workers in the past 60 days, most of them at the company's Carrolton, Tex., manufacturing and engineering facility. "There has been considerable pricing pressure, too much inventory, too much capacity and a flat marketplace," said U.S. sales manager Dick Konrad.
Excess capacity has pushed prices down dramatically in that market. For instance, for every $6 that the company once earned, it now earns $2, said Konrad. With Japanese firms getting into the market, capacity has been increased even further. In the long run, those low prices will turn the downturn into an upswing, Konrad said.
"In the near future, the computer industry or digital data-processing industry is going to be a leading growth industry. It just doesn't happen to be too swift right now," he said. "I would expect that within six months there will be a sharp rebound in our business, and the product will be very difficult to get."
At least one computer firm has dismissed workers in response to reduced demand, however. Honeywell Inc. of Minneapolis said it is dismissing about 250 workers at its large computer-manufacturing operations in Phoenix.
"It's bloody," said an official of one computer parts company. "But we heal fast."