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Electronics Production | January 09, 2009

ASM: 200 jobs will be lost in Almere, Netherlands

ASM Europe plans to transfer the remaining manufacturing and operational procurement activities for the Vertical Furnace product line from Almere, the Netherlands, to the company's Front-end manufacturing operations in Singapore (FEMS) as well as a workforce reduction in Almere. The implementation will take place over the next 12 months.
ASMI expects the proposed measures will have a positive impact on the Company's Front-end gross margins and will lower the operating break-even level for Vertical Furnaces by at least 30%. Anticipated initial benefits in 2009 in terms of lower Vertical Furnace costs are expected to be approximately €7 million. Reorganization charges of approximately €25-30 million are expected to be included in the Company's accounts, mainly in 2009. This includes an estimated €6 million in non-cash fixed asset impairment charges.

In making the announcement, Chuck del Prado, President and Chief Executive Officer of ASM International, said, "Lowered capacity utilization at our FEMS facility - the result of deteriorating global economic and industry conditions, today allows us to execute several steps in our 'April 2008 Roadmap to Front-end Profitability' simultaneously and to accelerate our Roadmap. The measures we are announcing today will lead to a leaner and more focused, cost-competitive Front-end operation, and one that is capable of generating higher gross margins with a structurally lower cost-base."

Mr. del Prado continued, "Losing loyal and dedicated employees is a painful process. However, we are committed to making tough choices and firmly executing on them in order to deliver improved Front-end profitability. "We will make every effort to ensure that an equitable social plan for those leaving the Company will be determined in the framework of all applicable consultation procedures with the ASME works council and the trade unions."

Five years ago, ASMI established FEMS as its low-cost manufacturing hub for Front-end production in Singapore. The transfer of manufacturing was planned in three stages, as detailed in the Roadmap to Front-end Profitability. Phase 1 includes the transfer of the manufacturing of generic parts and subassemblies, which represent approximately 70% of the cost of goods sold, for all products. As of December 2008, ASMI has completed Phase 1 for three of its core product groups: vertical furnaces, epitaxy and PECVD, and is beginning the Phase 1 transfer of its Transistor Products ALD components. The Company is utilizing the current conditions of low production volumes to initiate the next step involving the transfer of vertical furnace final assembly and testing, concurrent with the completion of Phase 1 for the remaining product categories.

The proposed workforce reduction affects approximately 200 employees in Almere. The remaining ASM Europe workforce of approximately 350 people will concentrate on Vertical Furnace R&D, Vertical Furnace Product Management and regional Sales & Service activities for all Front-end products. Mr. del Prado added, "ASMI will maintain a strong, highly skilled technology workforce at Almere, underscoring our commitment to retaining a strong base in the Netherlands."

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