See also: NXP declares itself happy with private equity ownership
Citing a flat semiconductor market, a weakening macro economic environment, under-loaded factories and tough market conditions, Frans van Houten (pictured), CEO of the private equity-owned NXP Semiconductor, announced a restructuring programme which could lead to a loss of 4,500 jobs mainly in manufacturing.
The re-structuring will cost $800m and is expected to save $550m a year. "80 per cent of our sales are in dollars and 50 per cent of our costs are in Euros," said van Houten. The changes will lead to a reduction in annual operating expenses of $250m and are expected to be implemented mostly during 2009
NXP is closing its East Fishkill plant in the USA next year, one of its two fabs in Hamburg, part of its Nijmegen fab and will sell its Caen fab.
1,300 of the 4,500 jobs lost will be in the Netherlands, with 3,000 being lost with the closure of east Fishkill and downsizing at Hamburg.
van Houten added that: "The consequences of the wireless joint venture with STMicro are that we are a smaller company with an inappropriately high cost base."
He said the redeploying the R&D effort associated with wireless to other parts of the business would mean that R&D would still account for 16 to 17 per cent of sales revenue, commenting: "Innovation is the lifeblood of the semiconductor industry."
Now out of wireless, NXP will focus on its automotive, identification, home, and multi-market businesses.
The fab in Fishkill, New York, USA will be closed ultimately in 2009. 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 for sale.
The company is open to offers for this facility from prospective buyers, however, in the event that a buyer is not found the facility could be closed as well during 2009. This plan targets to increase the loading in the remaining fabs to over 90 percent, as well as result in expected savings of $300m on a run rate basis by the end of 2010.
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