ST shuttering three sites to cut costs

July 11, 2007 – Following its plan to carve out its flash memory business in a JV with Intel, STMicroelectronics says it will shut down three of its manufacturing locations over the next two years, resulting in about 4000 employee layoffs.

The facilities include a 150mm fab in Carrollton, TX, a 200mm fab in Phoenix, AZ, and a backend packaging and test facility in Morocco, with all products manufactured there being requalified at other sites. ST already is globally migrating most of its 150mm production to less-expensive facilities in Singapore or to 200mm sites, and has phased out most of its 150mm operations in Europe, saving >150 million/year.

The 200mm site in Phoenix focuses on mature technology and would be too costly to upgrade for long-term utilization, so its capacity will be shifted “directly or indirectly” to other ST plants or subcons in Asia and Europe, the company said.

Meanwhile, ST says it will transfer most of the operations of its older Ain Sebaa (Casablanca) plant, also deemed unsuitable for upgrade, to its newer leading-edge Bouskoura 2000 testing and packaging facility in Morocco. Some mature product lines will be transferred to subcons, the company noted.

ST says the restructuring and closures will generate ~$150 million per year in savings in the cost of goods sold, with pre-tax impairment and restructuring charges are expected to be $270-$300 million, most of that in cash charges.

“Growing revenue is important, but we’re also committed to improving our cost structure by reducing the number of our manufacturing sites and, as a result, trimming excess capacity and lowering manufacturing overhead,” said Carlo Bozotti, president/CEO of STMicroelectronics, in a statement.


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