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BY PETER CONNOCK, Chairman of memsstar

The dramatic shift from the trend for increasingly advanced technology to a vast array and volume of application-based devices presents Europe with a huge opportunity. Europe is a world leader in several major market segments – think automotive and healthcare as two examples – and many more are developing and growing at a rapid rate. Europe has the technology and manufacturing skills to satisfy these new markets but they must be addressed cost effectively – and that’s where the use of secondary equipment and related services comes in.

While Moore’s Law continues to drive the production of advanced devices, the broadening of the “More than Moore” market is poised to explode. All indicators are pointing to a major expansion in applications to support a massive increase in data interchange through sensors and related devices. The devices used to support these applications will range from simple sensors to complex packages but most can, and will, be built by “lower” technology level manufacturing equipment.

This equipment will, in many cases, be required to be “remanufactured” and “repurposed” but will allow semiconductor suppliers to extend the use of their depreciated equipment and/or bring in additional equipment, matched to their process needs, at reduced cost. In many cases this older equipment will need to be supported by advanced manufacturing control techniques and new test and packaging capabilities.

SEMI market research shows that investment in “legacy” fabs is important in manufacturing semiconductor products, including the emerging Internet of Things (IoT) class of devices and sensors, and remains a sizeable portion of the industries manufacturing base:

  • 150mm and 200mm fab capacity represent approximately 40 percent of the total installed fab capacity
  • 200mm fab capacity is on the rise, led by foundries that are increasing 200mm capacity by about 7 percent through to 2016 compared to 2012 levels
  • New applications related to mobility, sensing, and IoT are expected to provide opportunities for manufacturers with 200mm fabs

Out of the total US$ 27 billion spent in 2013 on fab equipment and US$ 31 billion spent on fab equipment in 2014, secondary fab equipment represents approximately 5 percent of the total, or US$ 1.5 billion, annually, according to SEMI’s 2015 secondary fab equipment market report. For 2014, 200mm fab investments by leading foundries and IDMs resulted in a 45 percent increase in spending for secondary 200mm equipment.

Secondary equipment will form at least part of the strategy of almost anyone manufacturing or developing semiconductors in Europe. In many cases, it is an essential capability for competitive production. As the secondary equipment industry increases its strategic importance to semiconductor manufac- turers and researchers it is critical that the corresponding supply chain ensures a supply of quality equipment, support and services to meet rapidly developing consumer needs.

Common challenges across the supply chain include:

  • How to generate cooperation across Europe between secondary equipment users and suppliers and what sort of cooperation is needed?
  • How to ensure the availability of sufficient engineering resource to support the European secondary installed base?
  • Are there shortages of donor systems or critical compo- nents that are restricting the use of secondary equipment and, if so, how might this be resolved

Europe’s secondary industry will be in the spotlight during two sessions at SEMICON Europa 2015:

  • Secondary Equipment Session – Enabling the Internet of “Everything”?
  • SEA Europe ‘Round Table’ Meeting

The sessions are organised by the SEMI SEA Europe Group and are open to everyone associated with the secondary industry, be they device manufacturer or supplier, interested in the development of a vibrant industry providing critical support to cost effective manufacturing in Europe.

Today, SEMI announced additional details on the 29th annual SEMICON Korea, with more than 40,000 expected attendees, the largest semiconductor technology event in Korea.  The theme for the January 27 through 29 exhibition at Seoul’s COEX is “Connect to the Future – Markets, Technology, and People.”  SEMICON Korea will feature new innovations, technologies and present the future of semiconductor processing technology. The event will be co-located with LED Korea 2016, the leading exhibition for LED manufacturing.

SEMICON Korea 2016 will feature over 530 leading companies from 20 countries with expectation of a record 1,870 exhibition booths. With 97 presentations on diverse topics for 60 hours, the event offers exceptional opportunities to learn and network. In addition, four industry thought leader keynotes will provide insight into the future of global semiconductor industry (including a keynote that will be announced soon before SEMICON Korea):

  • Dr. Ahmad Bahai, CTO of Texas Instruments
  • Dr. Aart de Geus, chairman and co-CEO of Synopsys: “IoT: from Silicon to Software”
  • Berthold Hellenthal, head of the Audi Progressive Semiconductor Program at Audi: “Inventing the Automotive Future”

The keynotes will be followed by a broad offering of deep programs including the SEMI Technology Symposium where experts in semiconductor manufacturing processes will discuss the latest issues and new technologies. The event also covers advanced lithography, advanced process technology, device technology, plasma science and etching, contamination-free manufacturing and CMP, and advanced packaging technologies.

In addition, forums and seminars cover major issues in the semiconductor market, including System LSI, Metrology and Inspection (MI) and Test. The SEMI Standards Program, which develops the global standards indispensable in the strengthening of international competitiveness, will conduct a strong program. Two other programs are increasingly popular with their exclusive navigation of the semiconductor manufacturing supply chain:  Supplier Search – featuring the world’s leading materials manufacturers, and OEM Supplier Search – which facilitates business cooperation between global suppliers and Korea’s parts manufacturers.  The President Reception is a SEMICON Korea highlight where industry leaders network — bringing together suppliers, customers, and innovation leaders.

For a complete schedule of technical sessions and events, visit http://www.semiconkorea.org/en/attend/program-sessions.

SEMICON Korea 2016 registration (www.semiconkorea.org/en) opens November 16. Complimentary registration includes access to the exhibition area and attendance of the keynote speeches.

Systematic – and predictive – cost reduction in semiconductor equipment manufacturing

BY TOM MARIANO, Foliage, Burlington, MA

After a period of double-digit growth, the semiconductor equipment industry has now stabilized to the point where recent market forecasts are predicting anemic single-digit growth rates. This is driven by total market demand from chipmakers. For example, despite strong growth of 12.9 percent in 2014, Gartner, Inc. projects worldwide semiconductor capital spending to only grow 0.8 percent in 2015, to $65.7 billion. [1] Additionally, this industry has always been subject to volatile demand cycles that are notoriously difficult to predict.

Translation: It’s extremely challenging for today’s semiconductor equipment manufacturers to improve their financial performance. There are fewer and fewer opportunities to grow topline revenue through innovation and new product development. And, after several years of cutting costs on existing products and not realizing enough cost reduction to improve margins, it’s difficult to know how to do it differently.

Yet a viable alternative to improve financial performance does exist: A disciplined, rigorous, and systematic approach to reducing costs that delivers more predictive results.

A systematic approach to cost reduction

Where cutting costs was once perceived as the end result of “desperate times, desperate measures,” many innovators are now using this approach much more proactively. By
meeting the idea of cost reduction head on – as an opportunity, not a last resort – many semiconductor equipment makers are uncovering wasteful, inefficient, and costly processes, often in areas they once overlooked. At this point, you may be thinking, “All of this sounds great, but what is a systematic approach to cost reduction, and how is it different from what I’m doing?”

Remember that many manufacturers (in all industries) tend to have a hard time driving costs down. They may set cost reduction goals and then attempt to achieve them using various ad hoc approaches. But they really need to understand exactly what their true costs are, where they exist, and which areas will improve their margins.

A systematic approach to cost reduction gives them this insight. With improved visibility into the entire organization, various processes, and how they execute, semiconductor equipment manufacturers can’t identify the right places to cut costs and hit their cost savings goals. This is a very detailed and planned approach in which organizations closely examine areas such as cost of goods sold, R&D, and service to make more informed decisions that will position their business for long-term success. This is the value of a systematic approach to cost reduction.

This approach also introduces the element of speed, helping equipment makers realize cost savings much faster than ad hoc cost-cutting initiatives and puts them on a path to achieve more predictive results. Beyond the positive (and more obvious) impact successful cost reduction has on a semiconductor equipment manufacturer’s bottom line, it also provides a number of significant benefits such as improving productivity, freeing up key personnel, and providing needed capital to fuel new growth.

The path to predictive results

Even if the concept of a more strategic approach to cutting costs sounds reasonable, many semiconductor equipment manufacturers struggle with how to begin and where to focus. All to often they resort to making reactive decisions regarding existing products without the necessary data, leading them to ask questions such as, “Should we have an obsolescence plan for this product?” “How much could we save?” and “Will this lead to bigger problems down the road?”

Without understanding where your best opportunities for cost cutting are, it’s a lot larder to predict when, and if, cost reduction goals will be met. A systematic approach to cost reduction includes establishing clear cost targets, communicating them to leadership, and measuring and reporting results along the way.

The first step is to engage with an outside firm that has a singular focus on cost reduction, and one that is clearly separated from day-to-day operations and current organizational dynamics. Such an engagement will yield an actionable list of improvements with specific cost targets, realistic timelines for achieving these goals, and future plans for reinvesting the cost savings.

More specifically, a systematic cost reduction approach will focus on three key areas: material costs, R&D costs, and service costs:

1. Material costs: The bill of materials is one of the most common ways to see all the components needed to produce the end product. But this goes well beyond the pure cost of materials. Research has shown that improving the way these components are managed can affect 80-90% of the product’s total costs.[2]

For semiconductor equipment manufacturers, the cost reduction process should start with the selection of the products or sub-assemblies that have the highest potential for savings. Focus on those products that are still generating significant revenue, but may not be receiving much attention in terms or engineering upgrades and enhancements. Thoroughly examine the bill of materials for these products by addressing materials, design, complexity reduction, the potential to create common assemblies, and more.

Value engineering efforts can simultaneously improve product functionality and performance while reducing bill of material costs. This effort should factor in ways to meet RoHS requirements and when to make end-of-life decisions for various electrical components to improve design efficiency and the effectiveness of the product.

A realistic cost reduction goal can then be created and a resulting value-engineering project can commence, often using low-cost offshore resources to best achieve those savings.

2. R&D costs: Making better decisions related to R&D processes and product development can shave considerable costs. Some areas to focus on include:

• When to officially end of life non-performing products
• When to consolidate products, or possibly even entire R&D departments
• When and how to move sustaining engineering efforts offshore, or to other lower-cost alternatives

The critical next step is to look at all products and all product variations to determine if an official end-of-life program should be employed. These decisions are notoriously hard to make and often require difficult conversations with key customers, but they are necessary nonetheless.

Many semiconductor equipment manufacturers have grown through acquisitions, creating redundant engineering groups that can be eliminated or downsized. Performing an organizational analysis of all R&D activities may uncover opportunities to consolidate and combine functions or create centers of excellence that focus on specific technical areas eliminating redundancies of technical specialty.

3. Service costs: Examine engineering and design processes to find ways to improve performance, reliability, and costs. For example, adding data collection technology or product diagnostics to enhance remote support efforts and predictive maintenance.

Improvement of product reliability is usually a large multiplier when it comes to service and spare parts costs. Collect and analyze field data to find the most significant issues driving service costs and then look to cut where possible.

For example, equipment in the field often does not have the capability to report enough information to effectively identify a problem. Adding increased data logging and communication can be used to clarify machine status and point services in the right direction. Connectivity can also help with remote diagnostics, all of which helps reduce costs, uptime, and customer satisfaction.

Cost Reduction as a Competitive Advantage

Short-term market forecasts will continue to make it challenging for semiconductor equipment manufacturers to deliver improved financial results. Yet the concept of a systematic approach to cost reduction is a proven way for them to proactively cut costs – in the right places – and also make better decisions related to existing products and other business systems and processes.

By taking a disciplined, rigorous, and objective look at any and all parts of their organization, semiconductor equipment makers can capitalize on new opportunities to free valuable resources, improve processes and future technology, and reinvest savings for future growth. For many equipment manufacturers the greatest obstacle to successfully exploiting these opportunities is insufficient experience and expertise with a disciplined and unconventional way of approaching cost reduction projects. A systematic approach to cost reduction will be the key to success for companies looking to improve their competitive advantage.

References

1. Gartner, Inc., “Gartner Says Worldwide Semiconductor Capital Spending to Increase 0.8 Percent in 2015: Conser- vative Investment Strategies Paving the Way to Slower Growth in 2015,” January 13, 2015. http://www.gartner. com/newsroom/id/2961017.

2. Forbes, “Product Lifecycle Management: A New Path to Shareholder Value?” August 5, 2011, http://www. forbes.com/sites/ciocentral/2011/08/05/product-lifecycle- management-a-new-path-to-shareholder-value/.

Worldwide silicon wafer area shipments decreased during the third quarter 2015 when compared to second quarter area shipments according to the SEMI Silicon Manufacturers Group (SMG) in its quarterly analysis of the silicon wafer industry.

Total silicon wafer area shipments were 2,591 million square inches during the most recent quarter, a 4.1 percent decrease from the record amount of 2,702 million square inches shipped during the previous quarter. New quarterly total area shipments were flat when compared to third quarter 2014 shipments.

“After two consecutive record breaking quarters, quarterly silicon shipment growth slightly declined,” said Ginji Yada, chairman of SEMI SMG and general manager, International Sales & Marketing Department of SUMCO Corporation. “Quarterly shipments for the most recent quarter are on par with the same quarter as last year, with total silicon shipment volumes for 2015 through the end of the third quarter higher relative to the same period last year.”

Quarterly Silicon* Area Shipment Trends

Million Square Inches

Q3-2014

Q2-2015

Q3-2015

9M-2014

9M-2015
Total

2,597

2,702

2,591

7,548

7,930

* Shipments are for semiconductor applications only and do not include solar applications

Silicon wafers are the fundamental building material for semiconductors, which in turn, are vital components of virtually all electronics goods, including computers, telecommunications products, and consumer electronics. The highly engineered thin round disks are produced in various diameters (from one inch to 12 inches) and serve as the substrate material on which most semiconductor devices or “chips” are fabricated.

All data cited in this release is inclusive of polished silicon wafers, including virgin test wafers and epitaxial silicon wafers, as well as non-polished silicon wafers shipped by the wafer manufacturers to the end-users.

The Silicon Manufacturers Group acts as an independent special interest group within the SEMI structure and is open to SEMI members involved in manufacturing polycrystalline silicon, monocrystalline silicon or silicon wafers (e.g., as cut, polished, epi, etc.). The purpose of the group is to facilitate collective efforts on issues related to the silicon industry including the development of market information and statistics about the silicon industry and the semiconductor market.

Analog ICs are critical to nearly all electronic devices. The world electronics market will consume over 121 billion analog ICs in 2015. This translates to several analog ICs per electronic device.

Analog ICs experienced stronger than average growth over the last several years as the mobility product segment grew at double digit rates. These products have a higher than average analog content, thus growth has exceeded the overall semiconductor market. However, this appears to be changing as the markets for end applications like smartphones and tablets are now growing at a slower rate as these markets saturate and replacements become the growth driver.

“The Internet of Things presents a great growth potential for analog and sensors, but large volumes for that market are still a few years away,” said Jim Feldhan, president of Semico Research.  “Consequently, we are seeing an inflection point in the analog market. Over the next five years, analog sales growth will slow to a CAGR of 4.4% in dollar terms and 5.3% in unit terms.” This growth rate will lead to a market size of $56.5 billion by 2020.

Semico Research’s newest report, Analog Market: Making Digital Systems Come Alive, forecasts 35 analog product categories from general purpose analog to power management to automotive and medical chips. The accompanying Excel spreadsheet includes quarterly data for these categories. Many of these products are made on older process technologies and account for 41.3% of total analog revenues. This report also includes regional data and detailed analog wafer demand data.

 

HILLSBORO, Ore. — October 27, 2015 — FEI Company and DCG Systems, Inc. today announced a definitive agreement under which FEI would acquire DCG for $160 million in an all cash transaction. DCG is a leading supplier of electrical fault characterization, localization and editing equipment, serving process development, yield ramp and failure analysis applications for a wide range of semiconductor and electronics manufacturers. Headquartered in Fremont, California, DCG is a profitable private company and was the recipient of Deloitte’s Technology Fast 500 award in 2013 and 2014.

The deal combines FEI’s leading physical failure analysis capabilities for the semiconductor lab with DCG’s complementary portfolio of electrical failure analysis solutions.  DCG’s offerings expand FEI’s served available market through the addition of optical imaging, thermal imaging and nano-probing technologies.  The combined company’s solutions will offer a more complete workflow for customers as they deal with the increasing complexities from process development to advanced 3D packaging.

“The acquisition of DCG expands FEI’s presence and capability in the semiconductor lab and enhances our ability to provide a complete workflow solution,” commented Don Kania, president and CEO of FEI. “The combination brings together leaders in physical and electrical failure analysis and will enable our customers to better connect workflows to improve time to data and efficiency.”

“Together with FEI we have a tremendous opportunity to offer our customers an integrated defect analysis solution,” commented Israel Niv, CEO of DCG. “The DCG team is excited to join forces with FEI and tap into FEI’s strong global presence and significant R&D capabilities to drive further penetration of DCG’s leading electrical failure analysis solutions.  We look forward to working together with FEI to provide integrated solutions to help our customers successfully execute on their future technology roadmaps.”

DCG generated revenue of $76 million in its fiscal year ended January 31, 2015.  The transaction is expected to be slightly accretive to FEI’s 2016 GAAP EPS.  FEI intends to fund the acquisition with cash on hand.

The transaction is expected to close by the end of 2015 and is subject to certain regulatory approvals and customary closing conditions.

WASHINGTON — Nov. 2, 2015 — The Semiconductor Industry Association (SIA), representing U.S. leadership in semiconductor manufacturing, design, and research, today announced worldwide sales of semiconductors reached $85.2 billion during the third quarter of 2015. This total marks an increase of 1.5 percent compared to the previous quarter, but is 2.8 percent lower than the third quarter of last year. Global sales for the month of September 2015 were $28.4 billion, 1.9 percent more than last month’s sales, but 2.8 percent less than sales from September 2014. All monthly sales numbers are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average.

WWSemiSalesSept15Source: WSTS

“Global semiconductor sales showed signs of resilience in September, increasing compared to the previous month across all regional markets for the first time in more than a year,” said John Neuffer, president and CEO, Semiconductor Industry Association. “However, softening demand and currency devaluation caused year-to-year sales to dip for the third straight month.”

Regionally, sales were up compared to last month in the Americas (4.0 percent), China (2.6 percent), Europe (2.2 percent), Japan (0.5 percent), and Asia Pacific/All Other (0.1 percent). Year-to-year sales increased in China (5.0 percent), but decreased in Asia Pacific/All Other (-3.5 percent), the Americas (-3.9 percent), Europe (-10.6 percent), and Japan (-11.4 percent).

WWSemiSalesSept15GraphSource: WSTS

“One thing proven to spur semiconductor sales globally is maintaining free and open markets,” Neuffer continued. “In June, SIA successfully encouraged policymakers to approve legislation to facilitate free trade agreements. In July, a major deal was struck in Geneva at the World Trade Organization to expand the Information Technology Agreement to eliminate tariffs on next-generation semiconductors called MCOs and a wide range of tech products. And in October, negotiators from around the Asia-Pacific region reached an agreement on a massive trade agreement called the Trans-Pacific Partnership (TPP). The TPP would spur growth and promote innovation in our industry and throughout the U.S. economy, and Congress should approve it.”

 

Kuala Lumpur, Malaysia and Erfurt, Germany, Nov. 2, 2015 – X-FAB Silicon Foundries, a leading More-than-Moore foundry, today announced it will expand the capacity and capabilities of its Kuching-based foundry operation, X-FAB Sarawak Sdn. Bhd., to meet accelerating demand for its core technologies – the 0.18µm and 0.35µm process platforms. With revenue having grown 25 percent for each of the past two years, and similar growth expected for the next two years, X-FAB plans to invest a total of US-Dollar 114 million between 2015 and 2017. This includes capex spending amounting to US-Dollar 29 million in the current year.

X-FAB Group with its clear focus on automotive, industrial, and medical applications has transitioned X-FAB Sarawak from a manufacturing facility for commodity-type products into a high-value-add business for products with a long life cycle. Since it became part of the X-FAB Group in 2006, the site in Kuching has undergone a complete change in most of its technology portfolio, its application focus, its customer base, product life cycles and quality systems.

YB. Dato’ Sri Mustapa Mohamed, Minister of International Trade and Industry said, ”We are very excited that X-FAB Sarawak, one of the two pure-play semiconductor wafer foundries in Malaysia, continues to be at the forefront of our local semiconductor manufacturing industry.  The decision made by X-FAB to expand its operation in Malaysia is testament to the country’s strong economic fundamentals and the capabilities of our local talent.”

“X-FAB’s operation in Sarawak has been driving the growth of local economy. They are employing more than 1,000 staff where more than 80 percent of them are considered to be high income earners. We believe that this expansion will act as a catalyst in attracting other high technology firms to establish their operations in Malaysia as they will be able to leverage on the wafer fabrication services provided by X-FAB,” he added.

“The State of Sarawak as a major shareholder is very satisfied with the recent development of both the X-FAB Group and, more specifically, the profitable growth of X-FAB Sarawak, said Dato’ Seri Tarmizi Hj. Sulaiman, Chairman of the Board of X-FAB Silicon Foundries SE. “We are pleased that X-FAB Sarawak developed from a small nucleus into a competitive industrial enterprise with the competence and help of X-FAB.”

Rudi De Winter, CEO of X-FAB Group said, “We are looking back at nine years of successful conversion and expansion of our Sarawak foundry operation. During this period, we changed the digital business into a more future-oriented business with our complex analog/mixed-signal technologies. These technologies primarily used for automotive, industrial and medical applications enabled us to build a stable and sustainable customer base. In 2016, we expect X-FAB Sarawak for the first time to represent more than 50 percent of X-FAB Group’s total revenue.”

Mike Young, CEO of X-FAB Sarawak, added, “I am very impressed by the site’s evolution over the past several years and the success we accomplished thanks to the dedication and commitment of all our employees here at X-FAB Sarawak. Our continuous efforts to excel have paid off, as confirmed by the two awards we received in 2015 for our outstanding HR achievements, namely ‘The Prime Minister’s Award for Excellence in Human Resources’ and ‘The 1Malaysia Employer Award for Big Companies.'”

San Jose, Calif., October 29, 2015 — Ziptronix, Inc., a wholly owned subsidiary of Tessera Technologies, Inc. and a leader in low temperature wafer bonding technology, today announced it has entered into a development agreement with Fraunhofer IZM-ASSID. The companies will work together to integrate Ziptronix Direct Bond Interconnect (DBI®) technology into Fraunhofer’s state of the art 300mm wafer production line and demonstrate DBI as the industry’s finest pitch, thinnest and lowest total cost-of-ownership 3D integration solution.

Increasingly, the industry is looking toward 2.5D and 3D-IC solutions as the most cost effective and efficient means of delivering the next generation of high performance computing and consumer electronic products. However, conventional approaches rely heavily on thru silicon vias (TSVs), micro-bumping and underfill, which can limit interconnect density, performance, form factor and cost-effectiveness. Ziptronix DBI technology can address these limitations and accelerate the adoption of game-changing 2.5D and 3D-IC architectures.

“Although great progress has been made, the industry continues to face challenges associated with the manufacturability, scalability and cost of current 2.5D and 3D-IC solutions. Ziptronix’s DBI technology is an enabling platform that can readily address many of these challenges,” said Juergen Wolf, Head of Fraunhofer IZM-ASSID. “We at Fraunhofer are very excited to work with Ziptronix to demonstrate the benefits of DBI technology to our customers on our 300mm wafer production line.”

“DBI is the industry’s highest density, highest performance, lowest profile and lowest cost-of-ownership 3D integration platform,” said Paul Enquist, Vice President of 3D R&D at Ziptronix. “It will revolutionize the world’s most challenging 3D-IC structures and devices, and we look forward to working closely with Fraunhofer to demonstrate this enabling capability to customers around the world.”

“The acquisition of Ziptronix, and the subsequent integration of its team and technology into Tessera, has allowed us to significantly expand the 2.5D and 3D value that we bring to our customers, and the response has been incredibly positive,” said Craig Mitchell, President of Invensas. “This development agreement with Fraunhofer is an important step in the continuing development of the DBI technology as we grow our 2.5D and 3D product offerings.”

Tokyo, October 28, 2015 — Toshiba Corp. said Wednesday that it will retreat from the complementary metal oxide semiconductor, or CMOS, image sensor business, by selling the production line at its Oita plant to Sony Corp.

Toshiba plans to sell the CMOS sensor production facility by the March 31 end of fiscal 2015 at an estimated price of 20 billion yen. Some 1,100 employees from the image sensor business will be rehired by the Sony group.

Toshiba also announced its withdrawal during fiscal 2015 from the white light-emitting diode business as part of reforms of its discrete semiconductor chip operations.

Intensifying competition led Toshiba to suffer market share declines and losses in the image sensor and white LED businesses. The company believes that loss-making operations were a cause of its accounting scandal and aims to accelerate its business reconstruction efforts by reforming semiconductor operations.

The company will set up a new firm in April to integrate the Oita plant in southwestern Japan with Iwate Toshiba Electronics Co., a group firm based in Kitakami in northeastern Japan. The integration is aimed at boosting production efficiency for such large-scale integration chips as analog integrated circuits for in-vehicle devices.

Toshiba will not close the Oita plant and will keep operating five plants in Japan for its production of LSI and discrete chips.

For the reform of semiconductor chip operations, Toshiba will face a surplus workforce of some 1,200 employees who are not moving to Sony. It will seek early retirements and consider transfers to the Yokkaichi plant, a core facility making flash memory chips, and other factories.

The company aims to restore profitability in LSI and discrete chip operations in fiscal 2016 by cutting their fixed costs by about 26 billion yen from fiscal 2014.