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.