ON Semiconductor to close wafer manufacturing facility in Aizu, Japan

PHOENIX, USA: ON Semiconductor, a premier supplier of high performance silicon solutions for energy efficient electronics, has announced plans to close its wafer manufacturing facility located in Aizu, Japan, by the end of June 2012. This closure is part of the company’s overall drive for operational efficiencies and is in line with an ongoing strategy aimed at migrating in-house production to large, high volume fabs, and investing in more advanced wafer technologies.

“It is vital to the growth of the company that our manufacturing technologies keep pace with the advancing needs of our customers, and that our operations remain competitive,” said Keith Jackson, president and CEO of ON Semiconductor. “The Aizu facility and its dedicated employees have been a valuable asset to the company, producing quality products. The 6-inch Aizu fab, however, is among our smaller volume wafer manufacturing facilities and the products we manufacture there can be produced at other fabs – including some 8-inch production facilities – that will provide better long term manufacturing efficiencies.”

The closure of the Aizu facility is expected to result in the elimination of approximately 197 full time and 94 contract jobs currently held by workers at the Aizu site. All Aizu products are expected to be fully transferred for production by early 2012. ON Semiconductor teams will begin working closely with customers whose products are produced at the Aizu facility to better enable a smooth transition and uninterrupted product delivery.

“The closure of our Aizu facility is another step forward in the company’s transformation of its manufacturing network,” said John Nelson, EVP and COO for ON Semiconductor. “The majority of Aizu’s production will be transferred to company-owned fabs and most of the products currently produced at the 6-inch Aizu fab will be transferred to 8-inch wafer production. Among the expected benefits for both the company and our customers will be higher yields and lower defect rates resulting from the use of newer 8-inch production equipment.”

“By 2013, following the closure of Aizu and the planned consolidation of SANYO’s Japan-based manufacturing operations, we anticipate that ON Semiconductor’s front-end manufacturing footprint will be reduced from nine company-owned sites to six sites,” said Nelson. “Yet, with the consolidations and expansion investments we have underway, we expect that our available production capacity in 2013 will be greater than our current capacity. Additionally, our manufacturing infrastructure will enable us to continue to expand to meet our customers’ needs.”

Financially, the Aizu closure is expected to result in total cash charges of approximately $20 to $25 million beginning in fourth quarter of 2011. Once the Aizu facility has closed, the company expects to save a total of approximately $8 million per quarter, with the full benefits seen beginning in the fourth quarter of 2012. ON Semiconductor will provide additional details regarding the anticipated financial impact of the closure of its Aizu facility during its third quarter financial earnings call, to be held the first week of November.