Product category: Power Supply ICs and Controllers
News Release from: ON Semiconductor
Edited by the Electronicstalk Editorial Team on 1 July 2005
Malaysian wafer fab set for closure
ON Semiconductor is to transfer wafer-fab operations from Malaysia to Phoenix by the end of 2006
As part of its ongoing strategy to consolidate manufacturing capabilities at key sites and improve operating efficiencies, ON Semiconductor is to transfer wafer-fab operations from its Site 2 facility in Seremban, Malaysia, to its facility in Phoenix by the end of 2006 and will also reduce its workforce.
This article was originally published on Electronicstalk on 1 July 2005 at 8.00am (UK)
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These actions are expected to result in total cash charges of approximately $3.2 million to $3.7 million in the second quarter of 2005 related to employee severance payments.
The discontinuation of wafer-fab operations in the 1800m2 of manufacturing space in the Site 2 facility eliminates approximately 80 jobs and is expected to result in a cash restructuring charge of approximately $1.2 million in the second quarter of 2005 for employee severance payments to be paid over the next 18 months.
As a result of these actions, the company expects to save a total of approximately $25 to $30 million over the next five years, beginning in the third quarter of 2006.
Savings during 2005 and 2006 are expected to be insignificant due to transition and other costs; however, savings during 2007 are expected to be approximately $6 million.
The reduction in force is part of the company's ongoing strategy to improve operational efficiencies and to better position itself for growth.
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The company has realigned its resources throughout the organisation, and as a result, is eliminating approximately 70 additional jobs.
This work force reduction is expected to result in a cash restructuring charge of approximately $2 million to $2.5 million in the second quarter of 2005 for employee severance payments and savings of approximately $1 million a quarter beginning in the third quarter of 2005.
Transferring the wafer production from Site 2 to Phoenix should enable the company to increase its factory utilisation while reducing the number of wafer production sites in its global manufacturing network.
The Phoenix wafer fab serves as the company's centre for the development and deployment of lean six sigma methodologies and is one of the company's most efficient manufacturing facilities.
The Phoenix wafer fab, with its 5600m2 of manufacturing floor space, is capable of increasing its manufacturing output without incurring a significant increase in cost or headcount.
The company will maintain its 26,000m2 assembly-and-test operation at Site 1 in Seremban.
Site 1 is the manufacturing facility adjacent to Site 2 in Seremban and is one of the company's largest manufacturing facilities and plays a significant role in the company's global manufacturing strategy.
The company also will continue its thin wafer and solderable top metal (STM) centre of excellence (COE) operations along with support for back grind and back metal in a portion of the Site 2 facility.
The company will redeploy the wafer-fab tool sets to its fab operations in Phoenix and other fab facilities within its global manufacturing network, and also is currently evaluating several potential opportunities to introduce other operations into the Site 2 facility on the successful transition of the site's production to the company's fab in Phoenix.
'We continue to take actions to improve our manufacturing efficiency and to better align our resources across the company', said Keith Jackson, ON Semiconductor President and CEO.
'We believe that the actions taken during the second quarter of 2005 will better position the company for growth and will provide further operating leverage in our model'.
'Apart from the actions announced today, the company will provide second quarter 2005 results and third quarter 2005 guidance in its second quarter earnings release and during its conference call scheduled for 25th July 2005'.
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