Zarlink Semiconductor will cease development work in chips designed for next generation DSL technology, a decision that will result in an undetermined number of layoffs.
Zarlink, which has approximately 300 employees in Ottawa, said its Network Access Group had successfully developed a first-generation chip set for very high rate digital subscriber line, or VDSL. Standard DSL delivers high-speed Internet and data services over regular copper telephone lines.
However, the revenue potential for the product wasn't materializing as quickly as expected.
"We were active in developing chips for this emerging market ?but the time to revenue is unacceptably long, perhaps a couple of years,?said Zarlink spokesperson Michael Salter.
He could not say not many jobs will be eliminated. The company will attempt to "redeploy?some staff, but some are likely to lose their jobs. The decision, which was announced to employees on Thursday morning, will be finalized over the next two weeks.
"With this decision, we are refocusing our resources on programs and products that demonstrate superior potential for near- and medium-term revenue,?CEO Patrick Brockett said in a statement.
Raymond James analyst Gary Baker said in a research note the decision has little impact on his rating on the company since the product wasn't yet on the market. He maintained his "market outperform?rating on the stock and said the company remains an excellent long-term investment.
He also expects Zarlink to meet or slightly exceed its guidance for revenues of US$46 million in the current quarter.
Earlier this month, fellow Ottawa chip maker Tundra Semiconductor also pulled a product not yet making money.
Tundra yanked its Tsi320 PCI-X-to-PCI-X bridge chip for the storage market, citing design flaws that would have consumed too much time and money to fix.
Zarlink, which has approximately 300 employees in Ottawa, said its Network Access Group had successfully developed a first-generation chip set for very high rate digital subscriber line, or VDSL. Standard DSL delivers high-speed Internet and data services over regular copper telephone lines.
However, the revenue potential for the product wasn't materializing as quickly as expected.
"We were active in developing chips for this emerging market ?but the time to revenue is unacceptably long, perhaps a couple of years,?said Zarlink spokesperson Michael Salter.
He could not say not many jobs will be eliminated. The company will attempt to "redeploy?some staff, but some are likely to lose their jobs. The decision, which was announced to employees on Thursday morning, will be finalized over the next two weeks.
"With this decision, we are refocusing our resources on programs and products that demonstrate superior potential for near- and medium-term revenue,?CEO Patrick Brockett said in a statement.
Raymond James analyst Gary Baker said in a research note the decision has little impact on his rating on the company since the product wasn't yet on the market. He maintained his "market outperform?rating on the stock and said the company remains an excellent long-term investment.
He also expects Zarlink to meet or slightly exceed its guidance for revenues of US$46 million in the current quarter.
Earlier this month, fellow Ottawa chip maker Tundra Semiconductor also pulled a product not yet making money.
Tundra yanked its Tsi320 PCI-X-to-PCI-X bridge chip for the storage market, citing design flaws that would have consumed too much time and money to fix.
