Wipro may shut France unit

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Wipro may shut France unit

Wipro may shut its unit in France which does semiconductor design work because of an unexpected fall in demand for such products.

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Wipro may shut its unit in France which does semiconductor design work. The reason for it is an unexpected fall in demand for such products. CNBC-TV18's Sunanda Jayaseelan reports.

Global semiconductor sales are expected to fall over 20% this year according to a report by the semiconductor industry association. Wipro is feeling the repercussions. The IT major has reportedly told its employees in its semiconductor design intellectual properties (IP) unit in France, that it could possibly exit the space. The unit in France which was acquired as a part of its new logic buyout earlier is the only unit that focuses on semiconductor chip IP for the company. It contributes about 10% to the Wipro's overall semiconductor revenues. While Wipro said it was too early to comment on its talks with its employees, a slowdown in the demand for products globally led the company to take this decision. Analysts say that orders for microchips came to a virtual standstill at the end of last year. That has squeezed profit margins.

Harish HV, Partner - Grant Thornton, India said that the industry is extremely cyclical. There have been about six significant cycles so far that the industry has had to contend with. Globally the environment is very challenging for the industry at the moment. The company has said it could either absorb the employees into other units or outplace them in other companies. But analyst point out that traditionally Indian companies have not done well in the semiconductor business and the closure of this unit could signal another exit by an Indian company from this space.