Chip maker Fairchild Semiconductor International Inc. (FCS) said Monday that it will close two manufacturing facilities and reduce its wafer fabrication lines as part of a realignment of its global manufacturing operations. The company noted that the realignment will enable it to improve product quality and lower costs.
San Jose, California-based Fairchild Semiconductor said it will eliminate its internal five-inch manufacturing facilities and significantly reduce its six-inch wafer fabrication lines. This will result 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.
Fairchild said the closures of the two manufacturing facilities in West Jordan as well as Utah and its fabrication lines in Bucheon, South Korea, are planned to occur from the second quarter to the fourth quarter of 2015.
The company is working closely with customers to complete the qualifications required and build adequate supply to support their needs. During the transition, Fairchild expects its internal and external supply chain to service customer orders without disruption.
Mark Thompson, Chairman and CEO of Fairchild, said, "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."
Fairchild will also continue to operate the assembly and test facilities in Cebu, Philippines and Suzhou, China.
Through the combined actions, Fairchild expects to incur cash restructuring and other costs of about $36 million, and non-cash charges of about $25 million for accelerated depreciation.
On completion of the realignment, Fairchild expects to realize annual savings of about $45 million to $55 million from the second quarter of 2014 financial baseline. The company also expects about 75 percent of the estimated savings to be cash savings, with the balance attributable to lower depreciation costs.
FCS is trading at $17.03, up $0.01 or 0.03 percent on a volume of 193,102 shares.
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