Restructuring programme

NXP Semiconductors is to sell or close four of its factories as part of a raft of restructuring measures.

According to NXP, the changes come in response to a challenging economic environment, the relative weakness of the US dollar and the reduction in size of the company after moving its wireless business into a joint venture with STMicroelectronics.

The restructuring programme includes a major reduction of NXP’s manufacturing base and its central R&D and support functions. This programme is expected to affect approximately 4,500 employees globally and is expected to result in annual savings of $550m (£314m).

NXP will now focus on its Automotive, Identification, Home and MultiMarket businesses, where it enjoys market leadership positions. The restructuring measures will establish NXP with a strong base to achieve its mid-term targets to deliver profitable growth with 15 per cent EBITA and positive cash flow.

Changes to the manufacturing operations include adopting more advanced production processes and reducing excess capacity in older technologies.

NXP plans to consolidate the majority of its production to Nijmegen and Hamburg in Europe, and to SSMC in Singapore.

NXP’s fab in Fishkill, New York, USA, will be closed in 2009. Additionally, two other factories are planned to be closed by 2010: the ‘ICN5’ part of the NXP facility in Nijmegen, Netherlands, and part of the ‘ICH’ fab of the Hamburg facility, Germany. NXP’s fab in Caen, France, will be put on the market. If a buyer is not found, the facility could close during 2009.

This plan aims to increase the loading in the remaining fabs to more than 90 per cent, as well as result in expected savings of $300m on a run-rate basis by the end of 2010.

The restructuring of NXP’s R&D and support functions is said to reflect its ambition to have a more balanced global cost base and reduced and more focused central R&D. Planned changes are expected to affect employees primarily in the Netherlands, France and Germany. After the restructuring, NXP will invest 16 to 17 per cent of sales in R&D, which is in line with leading semiconductor companies.