Rectifier Says It Will Cut Payroll by $3 Million

International Rectifier said Monday that it will slash its annual payroll by $3 million through executive pay cuts, early worker retirement and staff reductions as part of a push to return to profitability.

Officials at the El Segundo company could not specify how many people will be involved in each option or how many layoffs will be necessary, a spokeswoman for International Rectifier said.

“Until all the dust has settled and all the chips have fallen, we won’t know ourselves,” she said. The steps toward the 10% payroll reduction will be finished by mid-September, she added.

International Rectifier, which employs 2,200 people worldwide, is the nation’s largest independent manufacturer of power semiconductors, which are used to control electricity in industrial, commercial and military equipment.

International Rectifier said in a statement that it is making the cuts “to help meet the company’s profitability targets.” The company spokeswoman did not identify those targets except to say that “the targets would bring our performance in line with any good high-tech company.”

International Rectifier, which was hit later than most firms in the semiconductor industry slump, reported a $252,000 net loss for the year ended June 30, compared to net income of $209,000 in the previous year. Sales rose to $145.2 million in fiscal 1986 from $135.6 million the year before.

The company said the cuts probably will not “materially affect results from the current quarter. . . . But these savings, in combination with higher yields and other recent improvements in manufacturing efficiencies, are expected to benefit future performance.”

Analyst Daniel L. Klesken of San Francisco-based Montgomery Securities said he was not surprised by the proposed cuts. “They had losses in the last few quarters, and they needed to cut costs,” he said.

International Rectifier noted “several positive factors” in its business, including a gradually improving order rate for some of its products.

The semiconductor business is still sluggish and is recovering more slowly than had been expected earlier in the year, Klesken said.

U.S. semiconductor sales, measured in dollars, should rise about 7% this year rather than the 9% annual increase that had been predicted, he said. Last year, semiconductor makers sold an estimated $8 billion worth of silicon chips and other electronic parts in the United States.