Fairchild Semiconductor to close two facilities, cutting 15% of workforce

Fairchild Semiconductor, a supplier of high performance power and mobile products, today announced it will eliminate its internal five-inch and significantly reduce six-inch wafer fabrication lines, resulting in the closure of its manufacturing and assembly facilities in West Jordan, Utah and Penang, Malaysia, as well as the remaining five-inch wafer fabrication lines in Bucheon, South Korea.

Following the moves, Fairchild will operate production lines using eight-inch wafers in Maine and Pennsylvania, and retain one six-inch factory in Bucheon.

“Fairchild will also continue operating assembly and test facilities in Cebu, Philippines and Suzhou, China,” said Mark Thompson, Fairchild’s chairman and CEO.

In its official release, Fairchild said these cuts are a part of Fairchild’s ongoing initiative to enhance manufacturing capabilities, improve product quality, and lower costs resulting in greater supply chain flexibility and responsiveness for our customers.

Closures of both facilities and Fairchild’s remaining five-inch wafer fabrication lines in Bucheon, South Korea, are planned to occur from Q2 to Q4 2015.

“An adaptive supply chain must be the foundation of any global manufacturer’s operations in the increasingly dynamic semiconductor solutions market,” said Mr. Thompson. “The realignment we are announcing today will maximize the utilization of eight-inch factories and reduce the complexity of our manufacturing footprint, while creating the flexibility to support ongoing customer demand through a greater use of external manufacturing sources. Fairchild will continue operating eight-inch wafer fabrication lines in South Portland, Maine and Mountain Top, Pennsylvania, as well as the Bucheon six- and eight-inch fabrication lines.”

Through the combined actions, Fairchild expects to incur approximately $36 million in cash restructuring and other costs. The company also plans to record during the closure process non-cash charges of approximately $25 million for accelerated depreciation. Once completed, the company expects to realize annual savings of approximately $45 to $55 million from a second quarter of 2014 financial baseline. Of these estimated savings, approximately 75 percent are expected to be cash savings, with the balance attributable to lower depreciation costs.

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5 thoughts on “Fairchild Semiconductor to close two facilities, cutting 15% of workforce

  1. Bill Kohnen

    Surprised that for 5″ and 6″ Fabs they would have 25 million in depreciation still.

    My guess is Faiirchild is acquired in 12 months

    Reply
  2. Mike Clayton

    Agree with Bill, acquisition target rumors and behavior. Depreciation games like multi-year R/D status before triggering depreciation were common in past decades even if its only a few expensive upgrades in trench tools or thin wafer technology. Moving back East continues a trend from West to East in chip making (GF fabs in NY state, West Coast going fabless) East coast needs jobs, has no earthquakes, has lots of water, aging power grid that needs major update, shorter commutes than West for EV’s.

    5 and 6 inch wafers are fine for high product mix, small moderate power die, or old mil parts but for higher volume lower mix larger die the 200 and 300 mm fab guys win in my opinion. Infineon had been looking at many power chip makers but got better deal all around with IR for now? After Fairchild leans down, and Infineon gets past any US anti-trust issues absorbing IR, then they could pick up part or all of Fairchild unless they are more interested in more of the GaN on Si IP out there next. Looks like an interesting start for 2015-16 surge. With current drought in West,but great design innovation talent, the design-and-test-only fabless operations are what Western US does best.

    Reply
  3. I. Glaser

    The only surprise here is that Fairchild has survived that long. They have an ongoing tradition of kicking out their best innovators (Intel was started by people from Fairchild who were told that the idea of a CPU on a single chip is useless ans cannot work) and wasting their greatest discoveries (CCD image sensors were invented in Fairchild, but they thought that there was no business there and just wasted their lead).

    Reply
    1. Doug S

      CCDs were invented at Bells labs, not Fairchild in 1969. Fairchild did make the first commercial device, mainly because ex-Bell lab researcher Gil Amelio went to Fairchild shortly after Boyce and Smith’s initial invention. Lots of great inventions went the same way. The computer mouse was commercialized by…… Xerox?.

      Reply
  4. Winfield Hill

    I have always liked Fairchild Semi, in both of its incarnations, but in recent years I’ve become a much more enthusiastic fan. I have liked their new parts offerings, but one of the big things I like about them is that in general they don’t play the “discontinue older parts” game.

    Often other companies discontinue parts, not because they aren’t successful and still popular, but because they have shut down a specific fab where they were made and they don’t want to invest in re-engineering the part for another fab. This is especially true of “analog” parts made in smaller fabs.

    I’m hoping and praying that none of my favorite Fairchild parts will suffer the same fate, as they close these three small fab lines!!

    Reply

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