Press Release, combined unions of IBM La Gaude (CFDT,
CFE-CGC, CGT, FO, SNA, UNSA)

IBM sub-contracts its layoffs to AMCC*

Sold by IBM to AMCC for almost $300 million over the
past 2 years, 45 employees are now losing their jobs.

On Nov. 29, 2005, AMCC France announced to its
workers council that it will cut 45 jobs, or nearly
half of its employees there. It is likely that all of
these cuts will be made through layoffs.

AMCC established its French outpost nearly 2 years ago
after having purchased research and development
activities from IBM. The purchases included the
transfer of 100 employees from IBM sites in La Gaude
and Essonnes. Keeping to its strategy of eliminating
its French R&D activities, IBM took advantage of a
provision in the French labor laws (L122-12) to
transfer a first package of 50 employees in December,
2003, followed by a second 50 one year later.

Since the announcement of the second transfer, the
workers council and unions of IBM La Gaude, with wide
support from the employee base, protested the decision
to IBM management, citing the considerable risks
imposed on the employees sold to a company in as weak
a position as AMCC.

Despite the justifications backing up the protest, IBM
France management continued its single-minded pursuit
in selling the personnel and intellectual property for
nearly $300 million. All this was done without regard
for the viability of the activities independent of
IBM, nor for job security, nor for the legality of the
application of the law L122-12. In light of the
obstinate course taken by IBM, the workers council
and unions sued IBM to stop the transfer on the
grounds that the L122-12 was illegally applied.

In March 2005, the lower court in Grasse found in
favor of the employees. IBM immediately appealed, and
the outcome depends on a decision by the court of
appeals in Aix-en Provence on December 8, 2005. The
employees sold by IBM to AMCC who will be out of work
shortly have demanded that IBM assume its
responsibility for the mess and resume their
contracts.

*AMCC has about 700 employees worldwide, including
about 100 people in France at the sites of Sophia
Antipolis and Essonnes. AMCC specializes in the
development of chips for the telecom market, as well
as embedded processors base on the PowerPC
architecture. AMCC suffered enormously following the
crash of internet stocks at the beginning of the
2000s. This is the 7th restructuring with layoffs
since then. AMCC has posted continuous losses since
then, surviving because of a large infusion of cash
from a secondary public offering at the height of the
bubble.