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Published on : Aug 27, 2014

American semiconductor manufacturer Fairchild has said that it will be laying off nearly 15% of its global workforce following the closure of its facilities in Malaysia, Utah, and Korea. The company will cease the production of five-inch silicon from its plant in Bucheon, Korea. It will also scale down its capacity to produce six-inch wafers. The company will bring these closures into effect between the second and the last quarter of 2014.

According to Fairchild CEO Mark Thompson, the supply chain of a company needs to be adaptive given the dynamic nature of the semiconductors market today. He said that the company’s ‘realignment’ is an effort to ensure the maximum utilization of its facilities producing eight-inch silicon, as well as make its manufacturing footprint more simplified. The company now hopes to create a more responsive supply chain to the evolving consumer demand. For this, it will now look toward external manufacturing support.

The company’s fabrication lines for eight-inch silicon wafers will continue to operate from their current location in Pennsylvania and Maine. Moreover, the company’s eight-inch fabrication lines in Bucheon will also remain unaffected. Other facilities that will not be affected by this realignment are its facilities in Suzhou (China) and Cebu (Philippines).

All of these restructuring activities will translate into costs of approximately US$36 million (in cash) for the company. On completion of these restructuring initiatives, the company said that it expects to save US$45 million to US$ 55 million from Q2 2014. A large chunk (75%) of these savings is likely to be in cash, and the remainder will come from decreased depreciation costs.