National will close one fab in Scotland, and plans to spin off another
By Mark Hachman
Electronic Buyers' News
(10/05/98, 04:23:34 PM EDT)
Claiming to have “the equivalent of one factory too many to meet the business level of the next four to five years," Brian Halla, president and chief executive officer of National Semiconductor announced that the company will lay off as many as 600 employees in its Greenock, Scotland fab and consolidate all manufacturing in Scotland over the next 12 months into Fab 3, a 6-inch fab also based in Greenock.
Beginning in March 1999, National's workforce at Fab 1, a 4-inch wafer facility in Greenock dedicated to manufacturing analog ICs, is expected to decrease from 1,000 to 400 employees, the company said. Fab 1 will then be sold.
Once all of the company's manufacturing capacity is consolidated into Fab 3, National plans to spin out the facility into a separate foundry company.
Excluding National's fab in South Portland, Maine, National's uses about 50% of its remaining fab capacity, said a spokesman for Santa Clara, Calif.-based National. "Our analog business is doing pretty well, but we've got an overcapacity problem around the world," he said. "After evaluating all the options, we decided this was the best one with the least amount of change."
The layoffs will have no effect on the company's analog product design center in Greenock, which employs 40 people.
The decision to consolidate the operations at Greenock and seek investors to operate the facility independently is a direct result of continuing softness in the semiconductor market and of factory utilization rates below 50 percent, said Halla.
National said that even its best forecasts of market growth over the next several years would not support current capacity levels at Greenock but added that the flexibility of a foundry relationship would be a more viable approach to meeting periods of peak market demand. The company said it is prepared to support the spin out by buying back wafers and providing support services for a period of time to be negotiated.
Not a factor in the moves, the company said, were published reportstoday that the Greenock fab was under fire for exposing workers to toxic chemicals over a period of years.
"There is absolutely no connection" to announcement of the fab's closing, the spokesman said. Asked if there was any truth to the allegations that workers at Greenock had suffered an unusual number of health problems, he replied, "Of course not," adding that many of the alleged incidents happened 15 years ago.
National will incur a $25 million restructuring charge in its current quarter as a result of the moves.
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