Fairchild realigns global manufacturing capabilities

Fairchild Semiconductor 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. This realignment is 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. Fairchild is working closely with customers to complete the qualifications required and/or build adequate supply to support their needs. During the transition, Fairchild expects its internal and external supply chain to service customer orders without disruption. “An adaptive supply chain must be the foundation of any global manufacturer’s operations in the increasingly dynamic semiconductor solutions market,” said Mark Thompson, Fairchild’s chairman and CEO. “The realignment we are announcing today will maximise 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 operating assembly and test facilities in Cebu, Philippines and Suzhou, China.” Through the combined actions, Fairchild expects to incur approximately USD 36 million in cash restructuring and other costs. The company also plans to record during the closure process non-cash charges of approximately USD 25 million for accelerated depreciation. Once completed, the company expects to realise annual savings of approximately USD 45 to USD 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.