Fairchild to Close Plants, Cut Up to 15% of Workforce

Fairchild Semiconductor International Inc. (FCS), one of the chip industry’s oldest companies, will close aging plants and cut as much as 15 percent of its workforce as it shifts production to outside manufacturers.

Factories and some production lines will be closed in West Jordan, Utah; Penang, Malaysia; and Bucheon, South Korea, the company said in a statement yesterday. The closures may affect up to 15 percent of Fairchild’s about 9,000 employees, spokesman Bruce Fienberg said. The total number of job cuts hasn’t been fixed, he said.

Like other chipmakers, Fairchild is paring internal production and instead making more use of foundries, such as Taiwan Semiconductor Manufacturing Co. San Jose, California-based Fairchild, one of the pioneers of the chip industry in the 1950s, was eclipsed years ago by companies founded by former employees. The two most famous, Gordon Moore and Robert Noyce, built Intel Corp. into the world’s largest semiconductor maker.

“An adaptive supply chain must be the foundation of any global manufacturer’s operations in the increasingly dynamic semiconductor solutions market,” Fairchild Chief Executive Officer Mark Thompson said in the statement.

Fairchild, a maker of power converters, amplifiers and switches used in cars and consumer electronics, estimated the plant closures will result in restructuring and other costs of about $36 million. It also projected $25 million in depreciation charges. In 2013, the company’s revenue was unchanged at $1.41 billion following a 12 percent decline in 2012.

The closures, which will take place from the second to fourth quarters of 2015, will bring annual savings of $45 million to $55 million. Operations at more advanced plants in South Portland, Maine; Mountain Top, Pennsylvania; and Bucheon will continue, the company said.

Fairchild shares rose 1.2 percent to $17.12 at the close in New York, leaving them up 28 percent this year.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Jillian Ward, Reed Stevenson

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.