Semiconductor company sells Thai manufacturing facility
Sensing and power semiconductor specialist, Allegro MicroSystems, says it has entered into a definitive agreement to sell its manufacturing facility in Thailand (AMTC) to an undisclosed third party.
The AMTC purchase price is approximately USD 30 million before fees and expenses. The company says that the sale is an important milestone in the execution of its manufacturing transformation to streamline back-end operations and enhance gross margin. Allegro had previously announced its plans for back-end facility consolidation as part of a multi-year strategic transformation to optimise the its manufacturing footprint and reduce fixed costs. Last quarter, the company shared that it had successfully transferred production from AMTC into its Manila, Philippines facility, one quarter earlier than initially planned. With the closure and sale of the AMTC facility, Allegro's transition to a fabless, asset-lite manufacturing model is now completed. “This transaction demonstrates our strong commitment to and timely execution of our manufacturing transformation initiatives – giving us conviction in our gross margin expansion over time, in line with our long-term financial model,” says Ravi Vig, President and Chief Executive Officer, in a press release. “The sale of the AMTC facility is an important step in optimizing our manufacturing footprint and will further improve our production flow, reduce our cycle times, and enhance our profitability.” Allegro expects to close the transaction within the calendar year, subject to governmental approvals in Thailand and customary closing conditions.