Analog Devices shutters DSP design center

Analog Devices (ADI) today revealed plans to shut down its Austin DSP design center and lay off about 20 engineers. Although ADI reported strong results last week, the company is bracing for a sharp drop in demand. "The economic downturn means you have to decide where to spend money," says Rob DeRobertis, Director of Marketing at Analog Devices. "It's time to make some hard decisions."

The 20 engineers at the Austin center had been developing processors based on the popular Blackfin architecture. That work will now be consolidated into ADI's Norwood, Mass. headquarters. DeRobertis says that ADI remains fully committed to its DSP lines, but stressed the need for efficiency, noting that "You get better economies of scale when you have fewer facilities."

ADI is painting the layoffs as a consequence of macroeconomic factors, rather than a sign of weakness at the company. Industry analysts agreed. "Times are going to be tough for the next couple of months," says Will Strauss, President and Principal Analyst at Forward Concepts. "Cost cutting is going to be the norm. Even Qualcomm, the biggest fabless chip company in the world, has put a freeze on a hiring."

Strauss warns that engineers should expect more layoffs ahead, pointing out that trade groups are projecting declines across the industry. "We're looking at the early part of the slowdown," he says. Indeed, there are more layoffs ahead at Analog Devices. After announcing its results last week, ADI said it would take steps to reduce expenses by 10%. Thus the closure of the Austin center is only one of many cutbacks to come.