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CHIPS AND TECHNOLOGIES INC. ANNOUNCES CORPORATE RESTRUCTURING AND INCREASED INVENTORY RESERVES

 CHIPS AND TECHNOLOGIES INC. ANNOUNCES CORPORATE RESTRUCTURING
 AND INCREASED INVENTORY RESERVES
 SAN JOSE, Calif., Jan. 21 /PRNewswire/ -- CHIPS and Technologies Inc. ("Chips") (NASDAQ: CHPS) today announced it is restructuring its operations to increase its focus on key strategic products and reduce its expenses. Among the restructuring plans to be implemented are reductions in headcount associated with streamlining of operations and consolidation of its facilities. Chips also announced its intent to increase its reserve for excess and slow-moving inventory. Finally, Chips announced its intent to sell its multiprocessing architecture and product line (M/PAX).
 As a part of controlling overall expense growth, Chips has reduced its headcount, through a previous reduction in force in July 1991 and through normal attrition, by 10 percent since July 1, 1991. The company expects to further reduce headcount by approximately 20 percent by March 1, 1992.
 Chips is reserving an additional $16-$20 million related to certain excess and slow-moving inventory in the quarter ended Dec. 31, 1991 ("Second Fiscal Quarter 1992"). This reserve is primarily due to a dramatic decrease in volume demand and price erosion on some of the company's more mature products. Chips expects to announce a substantially greater loss for the second fiscal quarter 1992 than its loss for the prior fiscal quarter of $.73 per share. Chips will announce second fiscal quarter 1992 results on Jan. 28, 1992.
 Gordon A. Campbell, president and chief executive officer of Chips, said, "Chips continues to experience increased competition in the marketplace and intense price competition on most of its mature products as well as continue weakness in demand in the PC market. All of these factors continue to adversely affect the company's net sales, gross margin and operating results.
 "Chips is responding to these pressures with both immediate and longer term strategies. In the short term, cost cutting and control measures continue to be a priority. The current restructuring includes a reduction in headcount concurrent with an increased focus on a fewer number of our most important products and a consolidation of corporate operational and support functions."
 Campbell continued, "The company's long-term strategy is to be a supplier of system solutions. With the introduction of our processor products in September 1991, we can now offer complete PC system solutions to our customers. While the impact of these new products will not improve the company's operating results until they account for a significant portion of our net sales, we believe the changes we are announcing today will make us operationally more efficient and position us for greater success when our new products start shipping in volume."
 Chips and Technologies Inc. is the world's leading supplier of integrated silicon, software and design services to the worldwide microcomputer industry. The company's products include microprocessor- based solutions, VLSI CHIPSets, software accelerators, networking solutions, firmware and design services. Chips common stock is traded Over the Counter and is listed on the NASDAQ National Market System under the symbol "CHPS."
 -0- 1/21/92
 /CONTACT: Gary P. Martin of CHIPS and Technologies Inc., 408-434-0600/
 (CHPS) CO: CHIPS and Technologies, Inc. ST: California IN: CPR SU: RCN


JL-EH -- LA006 -- 1659 01/21/92 09:09 EST
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Publication:PR Newswire
Date:Jan 21, 1992
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