Siemens sale seen as unlikely

A search began this week to find a buyer for Siemens’ semiconductor plant on North Tyneside, whose impending closure threatens to leave a gaping hole in Britain’s electronics manufacturing base. A joint taskforce set up by Siemens and the government has set a deadline of next week for completion of a prospectus and marketing video […]

A search began this week to find a buyer for Siemens’ semiconductor plant on North Tyneside, whose impending closure threatens to leave a gaping hole in Britain’s electronics manufacturing base.

A joint taskforce set up by Siemens and the government has set a deadline of next week for completion of a prospectus and marketing video on the £1.1bn site.

Government agencies, embassies and commissions around the world are being alerted to the task of finding a buyer. All options for saving the 700 jobs at the 40ha site are being considered.

Industry sources say the chances of finding another semiconductor manufacturer to take over the site are remote. They say a buyer looking for an empty shell will present the best chances for the plant.

‘It could lie idle for years,’ said one sector analyst. ‘lnvestment in semiconductor capacity is being scaled back throughout the world and is expected to fall by 20% this year.’

Fujitsu, Hyundai, Samsung and Mitsubishi are among companies which have postponed or mothballed semiconductor investments.

Oversupply in the market for 16MB DRam (Dynamic random access memory) chips, which the Siemens plant made, has been the main factor in this downturn and a chief factor in Siemens’ decision to close the plant. The German company forecasts losses of over £350m for its semiconductor business this financial year.

The price of 16MB DRam chips has fallen 95% since 1995. At that time, industry expectations were for a market growth of at least 20%, with sales expected to reach £125bn by 1998.

But the economic crisis in Asia which takes 40% of the semiconductor market has led to a collapse of the market, which is expected to remain weak for at least the first half of 1999.