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Motorola: losses and cuts, but vigorous forecasts
Motorola, in line with its “asset lightening” strategy, announced its intention to cut semiconductor chip manufacturing costs by 67%, resulting in just $ 200 million. in 2021 up from $ 610 million. last year, and this is completely indecent compared to $ 2.4 billion. in 2000
Speaking at a press conference, Fred Shlapak, president of the semiconductor division, said his division will cut costs in 2021 to achieve “moderate profitability” by the fourth quarter. To do this, he said, in the next nine to fifteen months, the company will close four chip factories and reduce the number of its employees to 24 thousand by the end of the year. Since the beginning of 2021, the company has already reduced the number of its employees by 10 thousand.
Motorola’s fourth-quarter 2021 financials released Tuesday said the semiconductor chip division incurred $ 335 million. losses, but at the same time, its revenue grew by 4% compared to the previous quarter to $ 1.12 billion. In the third quarter of 2021. the sales of division of Motorola, engaged in the production of microcircuits, was $ 1.08 million., and losses – $ 355 million.
In terms of the company as a whole, Motorola expects sales across all segments to decline 16% to 18% in the first quarter of 2021 compared to the fourth quarter of 2021, to between $ 6 and $ 6.1 billion. Motorola also announces plans for additional spending cuts of $ 200 million. in 2021.
On a per share basis, the company expects a loss of $ 0.11 – $ 0.14 in the first quarter, excluding possible force majeure. In the fourth quarter, Motorola lost $ 0.04 per share, or $ 90 million. By the way, since 1930, last year was the first, completely unprofitable.
Thus, Motorola predicts that total revenue will continue to decline by 5% – 10% in 2021, from $ 29.5 billion. in 2021. The company hopes that Motorola will be able to return to profitability by the third quarter of 2021 if economic conditions continue to improve and if the company is able to reduce its costs, mainly by reducing its chip division.
At the same time, Shlapak predicts that in 2021. profits in the semiconductor industry will grow every quarter, and by the end of the year will grow by 5% – 10%. This is a rather encouraging statement, given that revenues in this sector of the industry fell by 30% during 2021 . He also claims that the company’s new initiative, launched in the second half of 2021 to license its intellectual property, resulted in a 25% increase in payments by the end of the year. However, the exact number of deductions in the company was not disclosed.
Motorola aims to further increase patent payouts up to 50% this year. Shlapak explained that it is possible to increase royalties by activating cross-licensing of patents, technologies and know-how, as well as reaching an agreement with partners on the commercial use of inventions made by the company in the field of semiconductors.
Expected to be $ 200 million., the remainder of the semiconductor microcircuits division, the company will spend on the production of chips using specialized SiGe: C (silicon-germanium technology using carbon) and radio frequency BiCMOS technological processes. To maintain the volume of chip production, the company intends to involve third-party manufacturing partners in the production.
Now Motorola is trying to convince everyone that “asset lightening” does not mean a decrease in the activity of new developments. Shlapak promised analysts that the company will continue to invest in new products and technologies. As an example, plans were given to transfer one of Motorola’s factories for the production of silicon wafers to a new 100 nm (0.10 micron) CMOS process technology by December 2021. The company has already demonstrated its 0.10 micron process technology with a new generation of copper connections at the International Electron Device Meeting (IEDM), held last month.