NXP closes ranks in Germany, shifts Philippines backend work

March 22, 2007 – NXP Semiconductors, the former Philips chipmaking business spun out last year to private equity owners, says it will close its facility in Boeblingen, Germany, by year’s end, transferring most of the production load to facilities in Nijmegen and Hamburg. The move, which will reduce NXP’s European cost base, is part of a larger “business renewal” strategy to improve operational effectiveness and profitability, the company said in a statement.

The “inevitable” move was decided upon after production loads dropped by 30% after the company’s withdrawal from two underperforming businesses. Other alternatives were explored including shifting to new processes, products, and partnerships, but “no alternatives were found to be realistic or economically viable,” explained Volker Kuckhermann, GM of NXP’s German operations, in a statement, adding that NXP is talking with trade union and works council to work out plans for the approximately 550 affected employees.

In Germany, NXP currently has innovation centers in Hamburg, Nuremberg, and Dresden contributing to its international R&D activities. The Hamburg site, which produces more than one million wafers per year, is also the strategic center of the company’s Automotive, Identification and standard-application discretes activities.

In a separate announcement, NXP said it is restructuring its backend manufacturing operations in Cabuyao, Philippines, to discontinue production of power amplifier and frontend modules and transfer Cabuyao’s system-in-package lines to a site in Calamba. About 400 employees will be laid off, while another 200 will make the move to Calamba, the company noted. NXP employs approximately 5700 people in the Philippines, with just over 3000 stationed in Cabuyao.

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