Fairchild Announces Changes To Global Manufacturing Capabilities

(RTTNews) - Fairchild Semiconductor (FCS) Monday said it would eliminate 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 the company's ongoing initiative to enhance manufacturing capabilities, improve product quality, and lower costs leading to greater supply chain flexibility and responsiveness for customers.

Closures of both facilities and Fairchild's remaining five-inch wafer fabrication lines in Bucheon, South Korea, are planned to occur from the second quarter to the fourth quarter of 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.

Mark Thompson, Fairchild's chairman and CEO. "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 to operate eight-inch wafer fabrication lines in South Portland, Maine and Mountain Top, Pennsylvania, as well as the Bucheon six- and eight-inch fabrication lines.

The company will also continue operating assembly and test facilities in Cebu, Philippines and Suzhou, China.

Through the combined actions, Fairchild expects to incur around $36 million in cash restructuring and other costs.

The company also plans to record during the closure process non-cash charges of about $25 million for accelerated depreciation.

Once completed, the firm expects to realize annual savings of approximately $45 to $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.