Nat’l Semi “modernizing,” reducing US/Scottish sites

Jan. 21, 2008 – National Semiconductor says it will close certain chipmaking toolsets and cut its workforce by approximately 200, mostly at two wafer fabrication facilities in the US and Scotland, in an effort to “modernize facilities and rationalize capacity.”

“Our future growth will be driven by higher-performance, energy-efficient analog products, more and more of which will be produced on 200mm wafer technology,” said Brian Halla, National’s chairman and CEO, in a statement. “This action today aligns our manufacturing capability with our future needs.” National had previously sold or exited several lower-margin businesses to focus on higher-value, higher-performance analog products, notably power management, and continues to leverage efficiency improvements through newer toolsets and work processes.

The moves mainly involve two of the company’s three facilities: Arlington, TX (150mm with a new 200mm line), and Greenock, Scotland (150mm), though “a small number” of positions also are affected at the company’s 200mm fab in South Portland, ME. Eliminated positions include both direct and indirect labor, manufacturing jobs as well as managerial, staff, and support. Arlington and Greenock each house more than 400 employees, with >500 in South Portland.

Most of the $20M in total charges — $12M for severance costs to employees, $7M in equipment impairment and disposal, and ~$1M to other obligations — will be recorded in the current F3Q08 (ending in February). Savings will be based on gross margins; the company hinted any impact by 3Q08 would be “relatively minor,” but translate into one percentage point of gross margin in 4Q08 and another point in 1Q09 (August 2008).


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