Hiring freeze at TSMC amid global slowdown

By Baker Li

TAIPEI (Reuters) - Taiwan Semiconductor Manufacturing Co (2330.TW), the world's largest contract chipmaker, imposed a hiring freeze amid a global economic downturn that saw its latest monthly sales post their biggest decline in nearly two years.

News of the freeze coincided on Tuesday with industry group World Semiconductor Trade Statistics forecasting 2009 global semiconductor sales would drop 2.2 percent, reversing its May forecast for 5.8 percent growth.

TSMC shares fell 5.6 percent, while crosstown rival United Microelectronics Corp (UMC) (2303.TW), the world's second-largest contract chipmaker, lost 5.4 percent. Taiwan's TAIEX index fell 3 percent.

TSMC spokesman J.H. Tzeng said the company (TSM.N), which employs more than 20,000, would continue with some select outside hiring, but only on a case-by-case basis.

"This is because of the economic slowdown. Generally speaking, there's a hiring freeze," he said.

In Singapore, shares in Chartered Semiconductor (CSMF.SI), the world's No.3 contract chipmaker, dropped 2.4 percent, but fourth-ranked Semiconductor Manufacturing International Corp (SMIC) (0981.HK) rose 0.6 percent in Hong Kong.

UMC, SMIC and Chartered Semi all posted losses in the latest quarter, with UMC reporting its first net loss in seven years.

TSMC was one of the first big Asian chipmakers to announce a headcount freeze, with firms in South Korea and Japan usually reluctant to disclose similar actions. Japan's NEC Electronics (6701.T) axed 685 jobs in March, and executives said last year they had effectively imposed a hiring freeze.

"Utilisation rates are falling, the outlook for the industry as a whole is not good, and we can only see a recovery in the second half of 2009," said Warren Lau, head of technology research at Macquarie Securities.

"If we look at their smaller peers, they've also been laying off staff, although those haven't been so publicly announced, so this further reaffirms the fairly severe downturn."

TSMC Chief Executive Rick Tsai told a supplier conference last week that the company did not rule out any cost-cutting measures, local media reported on Tuesday.

In the United States, Applied Materials (AMAT.O), the world's biggest chip equipment maker, said last week it would slash 1,800 jobs, or 12 percent of its workforce, as it warned that current quarter profit would fall far short of Wall Street expectations. [nN12286782]

National Semiconductor (NSM.N) also said last week it would cut its workforce by 5 percent as it lowered its guidance for quarterly revenue. [nN12289633]

And industry leader Intel (INTC.O), which makes central processing chips that serve as the brains for 80 percent of the world's PCs, shook markets last week with a 14 percent cut in its fourth-quarter revenue forecast, citing the global downturn. [nN12310791]

The Philadelphia Semiconductor Index .SOXX has more than halved this year, compared with a 44.1 percent drop on the tech-heavy Nasdaq .IXIC.

(Additional reporting by Doug Young in TAIPEI, Mayumi Negishi in TOKYO and Rhee So-eui in SEOUL; Editing by Jonathan Hopfner & Ian Geoghegan)