For Whom The Bellwether Tolls: Cymer Enacts More Cuts

 In a grim portent for the semiconductor sector, San Diego’s Cymer (NASDAQ: [[ticker:CYMI]]) says its fourth-quarter revenue will be about $100 million—at the low end of its guidance—and additional cutbacks will be necessary.

Cymer makes specialized and extremely precise “deep ultraviolet” laser systems that are used as light sources in the photolithographic process in which semiconductor circuitry is printed on silicon wafers. Each unit typically cost about $1.25 million, and the company has more than 70 percent market share of such systems worldwide. That makes the San Diego-based company a bellwether for the global semiconductor industry.

Cymer plans to make a number of cutbacks, including the elimination of 100 employees from its worldwide roster, or about 10 percent of its workforce. This latest round comes after it laid off 85 people in November. The company says the reductions are necessitated by a continuing deterioration in the industry. The Xconomy San Diego layoff tracker has been updated here.

“Based on the limited visibility that exists, the company currently anticipates that its first quarter 2009 revenue could decrease 30 to 35 percent compared to revenue for the fourth quarter 2008,” Cymer said today in a statement.

In addition to reducing its headcount to 900 employees, Cymer says it is enacting other cost-cutting measures, including:
—A temporary 10 percent cut in employee base pay.
—Suspending the company’s 401(k) matching program.
—Suspending annual merit increases and bonuses
—Significant cutbacks in non-essential operating and capital expenditures.
That’s a lot of pain for the industry leader in the high-tech laser business. Cymer said the cutbacks, which are expected to cost about $4.5 million to enact, are intended to lower its “global cost structure” by $50 million to $55 million a year.

Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.