Silicon Systems Blames Sales Dip in Laying Off 40

Silicon Systems Inc., a semiconductor manufacturer with its U.S. headquarters here, has laid off 40 of its 2,000 employees because of a drop in sales, its president said Tuesday.

The company, which is owned by Japan’s TDK Corp., makes computer microchips found in many disk drives. Carmelo Santoro, company president, said a drop in disk drive sales in early April caused a resulting drop in demand for his company’s product.

He said the layoffs are a normal adjustment in a cyclical business.

“If you’ve been around semiconductors and disk drives, you know these things are going to happen, you just don’t know when,” Santoro said. “We would be foolish not to react to the short-term drop in sales.”

He said this is the fourth time in his nine years with the company that he has had to lay people off. In April, 1985, the company laid off 40 of its 650 people.

Santoro would not quantify the sales drop. He said the company hired 400 people in the fiscal year that ended in March, after a record six quarters in which sales grew 60%. The company’s sales during its last fiscal year were more than $180 million, Santoro said.

Most of those laid off were in manufacturing at the company’s Tustin and Santa Cruz facilities. Santoro said he does not anticipate further layoffs, and expects the disk drive market to improve again in October.

Silicon Systems, which was acquired by its Japanese parent two years ago for $224 million, announced last August that it would reorganize its operations to create a decentralized management structure. At the time, Santoro said the company would hire 700 people by the end of 1991.

Asked about the apparent change in hiring plans, Santoro said he must have meant the 700 figure to include an expansion at a Silicon Systems subsidiary, Martflex Systems Inc., also of Tustin. Martflex makes flexible circuits with integrated circuits attached to them. It hired almost 300 people last year, Santoro said.