Siemens to close

10/01/1998

Siemens to close North Tyneside fab

Siemens is planning to close its North Tyneside, England, DRAM fab after a significant manufacturing contract with Taiwan`s Mosel Vitelic was terminated and efforts to find a buyer for the plant failed. The shutdown will affect about 1100 employees.

The Mosel Vitelic contract was announced last year, not long after the fab itself began production. Under the contract, 50% of the North Tyneside facility`s DRAM output would have been delivered to Mosel Vitelic for the next 10 years. Siemens also said an ongoing search for a buyer of the fab has been hampered by "enormous overcapacity" in the semiconductor business.

The semiconductor group recently reported losses totaling more than DM1 billion ($564 million) for this fiscal year. Company officials said the fab closure is necessary to secure the future of the semiconductor group, and cited severe DRAM pricing erosion as the core problem. "This move has been forced on us by the disastrous state of the semiconductor market and by the suicidal pricing policies of our Asian competitors," said Ulrich Schumacher, president of the semiconductor group.

Investments in the North Tyneside facility began in 1995. The operation opened 15 months ago, and has been producing 16-Mbit DRAMs at 3000 wafer starts/week. Production of 64-Mbit DRAMs, slated to begin this year, has not happened, a spokeswoman said.

Siemens has formed a joint task force with the British government to explore its options for retaining the UK location. - C.L.