Workers at some of Silicon Valley’s biggest companies will find themselves spending an uncommonly long time with their families this Christmas as the technology industry responds to the downturn with office and factory closures and enforced holidays.
Usually limited to traditional manufacturing industries such as the ailing carmakers, the year-end shut-down is this year sweeping through the office suites and research and development labs of information-age companies.
Hewlett-Packard, Cisco Systems, Advanced Micro Devices, Texas Instruments, Dell, Adobe and CSC are among the tech industry heavyweights to be taking a break, with some closed from December 22 until January 5.
HP said: “The only workers left to keep the lights on will be those involved in “critical customer support”.
The shut-down has been forced by belt-tightening across the sector as corporate and individual customers cut back on spending.
The wider cost-cutting has hit even Google, the latest emblem of Silicon Valley prosperity. The internet seach engine has trimmed spending on its famed perks with steps such as cutting the number of restaurants on its campus open in the evening.
In spite of the enforced leisure, workers will be hit directly by the closures, with most required to use up part of their holiday entitlement or, if they do not have the days to spare, take unpaid leave.
Given that many US workers receive only 10 days of vacation a year, the effect will be biggest there, although most of the companies to close say they will be halting operations worldwide.
HP said six days of its two-week shutdown would count against workers’ annual vacation entitlement, while technology services company CSC said employees would be docked seven days’ holiday.
One Valley executive said: “Man, is it ugly out there”.
He said the pain had spread from the wider economy in recent weeks. “It was nice to see record earnings for high-tech companies in the first three quarters during a so-called recession, and then the wheels fell off in October.”
Chip companies and other component makers have taken the brunt of the initial downturn in tech demand, as makers of hardware such as computers and routers have reduced orders in anticipation of deeper problems next year.
The iSuppli research company warned last week that excess semiconductor stockpiles in the global electronics supply chain were likely to nearly triple in the fourth quarter.
Advanced Micro Devices, the microprocessor maker based in Silicon Valley, said its workforce had been told to take five days’ mandatory vacation in the fourth quarter.
Elsewhere, Texas Instruments is temporarily closing many of its factories to run down its inventories. With its manufacturing operation running at only about 45 per cent of capacity, the Dallas-based company says such levels had not been seen since the second half of 2001.