Fairchild Semiconductor to Close Two Wafer Fabs

March 25, 2009 by Jeff Shepard

Fairchild Semiconductor announced plans to streamline and con-solidate wafer manufacturing. The company will close its wafer fabrication plant in Mountaintop, Pennsylvania leading to a closure of the site, and one of its wafer fabs in Bucheon, South Korea.

Fairchild states that these actions are consistent with its ongoing cost reduction strategy, and the need to align manufacturing capacity with end demand. Most products currently made at the Mountaintop site will be transferred to other internal sites. A small office will be maintained for technology and product line functions in the Mountaintop area. The South Korea site will close its four-inch line and transfer associated manufacturing to its five and six-inch wafer fabs. Fairchild says it will work closely with customers during the process to ensure a seamless transition.

"Sizing our manufacturing footprint and keeping our cost structure competitive are requirements for the long term health of our company and drive this production consolidation," said Mark Thompson, President, Chairman and CEO. "These actions reduce the number of wafer fabs in the company from six to four, and the number of front end manufacturing sites from four to three. We are committed to staying cost competitive in these hard economic times, and these changes will simplify operations, improve productivity and reduce costs."

The company anticipates the consolidation of the South Korea fabrication processes and the closure of the Mountaintop facility will be completed by June, 2010. Fairchild expects to incur approximately $18 to $23 million of cash charges, primarily for severance and other costs associated with transfer activities beginning in the second quarter. The company will also take additional non-cash charges of approximately $25 to $30 million for impairments and accelerated depreciation over the course of the next six quarters. In addition, roughly 200 jobs will be eliminated at the Mountaintop site. Once completed, the company expects to realize annual savings ranging from $20 to $25 million as a result of these closures.