Agilent narrows its focus, reduces local operations

LOVELAND – As Agilent Technologies Inc. (NYSE: A) continues to narrow its focus, Northern Colorado tech employment opportunities also narrow.

Agilent announced last summer that it would spin off its semiconductor test business as part of its restructuring plan. According to documents filed with the Trade Adjustment Assistance Program, the division has moved – and plans to continue moving – jobs overseas from Loveland and Fort Collins.

Local workers began to feel the effects of the shift as early as Feb. 22, 2005, according to TAA documents. The TAA program provides financial and training assistance to American workers whose employment is affected by work moving overseas.

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The semiconductor test business will operate as wholly owned subsidiary Verigy Pte. Ltd. until it is spun off around June 1. The company will eventually become publicly traded, with shares disseminated to Agilent shareholders by the end of the company’s fiscal year on Oct. 31.

“We’re actually in the middle of the IPO now,´ said Verigy spokeswoman Jana Knezovich, adding that Verigy shares should be on the market by the middle of the year.

Verigy will maintain its worldwide headquarters in Singapore, as does Agilent semiconductor spinoff Avago Technologies.

The jobs lost in Fort Collins and Loveland were not going to Singapore, however. Filings with the TAA indicate that many of the test business’ U.S. locations were losing jobs to a work shift to Germany.

At the time Agilent announced it would spin off the semiconductor test segment, there were 165 Colorado employees in the unit. All indications point to Colorado not serving as a main hub for Verigy.

“There is going to continue to be a very important piece of Verigy in Fort Collins,” Knezovich said. “It will be small, but we will still have a presence.”

The company will move its small team from the Agilent site to an 11,000-square-foot office on Innovation Drive in Fort Collins.

Verigy’s U.S. headquarters will be in the San Francisco area, where Knezovich, now at the Loveland site, will work. She said she plans to commute to the West Coast rather than relocate her family.

The test business used to be headed by Jack Trautman, interim president of the test group. Trautman worked out of Northern Colorado, but the company recently announced it has replaced Trautman with San Francisco native Keith Barnes. A company press release said that Trautman will “continue to support Verigy as a senior advisor through its transition into a separate company.”

The Verigy spinoff is a result of Agilent’s restructuring plan. Having shed all of the company’s ties to the volatile semiconductor industry, Agilent will go forward with a focus on its test and measurements business.

Agilent’s semiconductor products business was sold last year to a couple of investment groups, which named the business Avago Technologies. Spokeswoman Knezovich said that there are reasons for the difference in the spinoffs – private investment for Avago, IPO for Verigy.

“At the time, Agilent looked at all the options for all parts of the semiconductor businesses,” she explained. “These were the best options.”

The public offering of Verigy might be a product of the volatility of the test business, which is even greater than that of the semiconductor business.

“The semiconductor industry has recovered and hit a high in shipments in 2005,” according to Fred Bode, secretary of the Semiconductor Test Consortium. The consortium’s focus is on creating industry standards in the semiconductor test business.

“The test industry is the tail of the dog,” Bode said. “It gets whipped around more than the semiconductor industry as a whole.”

Currently, different test equipment is needed for each specific semiconductor. As the semiconductor industry transitions to commercial applications, it is producing a higher volume of chips for lower prices. Because of this, there is a need to reduce the cost of semiconductor test equipment, Bode explained.

“There is building pressure (for standardization) due to outsourcing,” Bode said.

Because fabrication companies overseas are creating and testing semiconductors for so many companies, the facilities have to maintain equipment to test each chip. The result is a building packed with test equipment that isn’t being well utilized.

Bode said that standardization will reduce costs for the semiconductor industry, but said that the effect on the semiconductor test industry is up for debate.