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TMCNet: Layoffs leave Silicon Forest less populated

[November 21, 2008]

Layoffs leave Silicon Forest less populated

(Oregonian (Portland, OR) Via Acquire Media NewsEdge) Nov. 21--In drips, drabs -- and the occasional torrent -- Oregon's technology jobs are steadily leaking away.

Layoff announcements that began as a trickle last summer are now a steady flow, with everyone from big chip manufacturers to tiny startups paring back in anticipation of a frigid economy through the winter.

Last month, Oregon high-tech employment was down 2,000 jobs from October 2007 -- the fastest rate of decline in four years, according to data out this week. And the picture is likely to get worse because the pace of layoffs is picking up.

"I don't think that there's a company out there right now that is not taking a hard, hard look at their financial plan for 2009," said Scott Olson, marketing vice president for a downtown Portland startup called Iovation, which laid off a dozen employees last week.

"We had to make some extremely difficult choices," Olson said.

Iovation, whose technology helps Web sites guard against fraudulent sales, retained nearly 70 employees. Because its fraud prevention tools save customers money, Olson said, Iovation has high hopes that clients will continue using its services through the downturn.

But other small companies are in more dire condition. Beaverton chip startup Ambric Inc. shut down Tuesday after it failed to come up with additional investment to keep the business afloat. Nearly all of Ambric's 60 employees are out of work while the company seeks a buyer for its technology.

Big companies are cutting jobs, too -- most significantly Hynix Semiconductor, which laid off 1,400 people last summer when it closed its Eugene chip factory. Earlier this month, Tektronix Inc. laid off 150 of roughly 2,000 employees near Beaverton as it girded for a slower 2009.

Oregon's biggest high-tech employer is Intel, which has about 15,100 employees in Hillsboro and surrounding communities. Although Intel dramatically lowered its fourth-quarter forecast last week, projecting a 16 percent drop in sales, the company said it hopes to survive the downturn without job cuts.

The chip industry is the biggest piece of Oregon's tech economy, and it's in for some particularly tough times, according to a forecast issued this week by technology analysts at high-tech research firm iSuppli. As consumers lose confidence, they're losing their appetite for buying computers and other new gadgets.

"When you see the consumers pulling back their spending, that has a very direct impact on semiconductor sales," said Dale Ford, vice president of market intelligence at iSuppli.

For the chip industry to recover, Ford said, the economy will have to rebound and semiconductor supply will have to reach equilibrium with demand. Don't look for that to happen overnight, he said.

"Our initial sense is this will last through 2009," Ford said. "2010 is probably when you'll start to see a healthy environment re-emerge."

In Oregon, state economic forecasters project job losses for the next two years in the computers and electronic products sector.

Some companies are trying to hold on to their employees, shutting down operations over the holidays and putting workers on leave. That's what Portland silicon wafer manufacturer Siltronic plans to do around Thanksgiving. Hewlett-Packard will do the same at Christmastime, extending its annual one-week shutdown for a second week in Corvallis and Vancouver.

At both companies, employees can collect pay during the shutdown by using vacation time.

There are at least a few hopeful signs in the Silicon Forest. One is TriQuint Semiconductor Inc. The communications chip company plans a maintenance shutdown at its Hillsboro factory for two weeks beginning in late December, but TriQuint reports that demand for its chips remains strong.

Analysts say TriQuint's chips are in Apple's newest iPhone and in other new smart phones, which appear to be among the most recession-defying products in high-tech this fall.

TriQuint says its prospects are "robust," and forecasts fourth-quarter sales up at least 25 percent over last year.

Although many Oregon startups are cutting jobs, small companies are holding up comparatively well overall. Through October, software employment in the state remained at an all-time high.

"What we're seeing, it doesn't feel as drastic or as desperate as it did the first time around, in 2001, with the dot-com cuts," said Rick Turoczy, an Oregon business consultant who runs the popular Silicon Florist blog.

This time out, Turoczy said, startups are cutting jobs in advance of business trouble in hopes that proactive steps will stave off catastrophe. And he said many Portland startups are small by design, and collaborative by nature. That makes them less vulnerable to the economic slowdown than entrepreneurs elsewhere who need frequent infusions of outside capital to keep their business ambitions afloat.

"There's still a lot of frenetic activity," Turoczy said, "and a lot of people getting stuff done."

Mike Rogoway: 503-294-7699; mikerogoway@news.oregonian.com

To see more of The Oregonian, or to subscribe the newspaper, go to http://www.oregonian.com.

Copyright (c) 2008, The Oregonian, Portland, Ore.
Distributed by McClatchy-Tribune Information Services.
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