Chip Demand Drops; 100 Let Go by Western Digital

A significant drop in the demand for semiconductor chips used in computers and a shift in its product mix prompted Western Digital Corp. of Irvine to lay off about 100 workers earlier this week.

They include about 35 of the 300 workers in the company’s Orange County wafer-fabrication plant and about 60 administrative workers in the corporate headquarters.

Another 350 temporary workers in the Camarillo, Calif., plant and 200 Malaysian packaging-plant workers will also be let go in the next few months, company officials said Wednesday. After the reductions, the company will employ about 1,700, with 1,000 or so based in the Irvine area.

“We have experienced significant growth over the past few years, but within that growth we have also seen significant shifts in the mix of our business,” said Roger Johnson, chairman, president and chief executive officer, in a statement.

For example, in 1983, Western Digital workers manufactured 78% computer chips and 22% computer boards. In 1985, the mix dramatically reversed to 30% chips and 70% boards, according to Ed Marinaro, senior vice president.

Industry analysts attributed the shift to a glut of low-cost semiconductor chips. In recent months, Japanese companies have flooded the U.S. computer-products market with inexpensive semiconductors. In response to the glut, U.S. chipmakers have laid off hundreds of workers.

While chip production has decreased, “Our board manufacturing has grown very rapidly over the past two years,” Johnson said. He added that Western Digital’s board workers increased from 100 two years ago to a current peak of more than 800.

He said the temporary workers who were hired in Camarillo to meet demand for new products would be laid off over the next few months. There currently are about 500 workers in Camarillo.

Western Digital has not yet released year-end figures.