Northern lights fade over UK chip plants

Northern lights fade over UK chip plants
Management buy-out fails at Siemens on Tyneside; Fujitsu set to write off closure costs. David Manners The Siemens semiconductor plant in North Tyneside is set for closure after the collapse of the latest rescue plan – a management buy-out. The future of the other North East fab also looks increasingly doubtful after Fujitsu announced that it wants to write off the plant’s closure costs in the current financial year. A Siemens company insider told Electronics Weekly: “We’ve got to the point where an irretrievable, irreversible decision must be taken.” Fujitsu’s top management wants to see its plant off the company books by April 5. Trade and Industry Secretary Stephen Byers, whose Wallsend constituency is near the Siemens factory, remains hopeful: “This is obviously disappointing news. The government remains committed to using its best endeavours to find a new owner for the plant. This news simply means we must redouble that effort,” said Byers. However, Wilf Corrigan, chairman and CEO of LSI Logic, reckons: “Buying old fabs is like buying old cars – it costs a lot to restore them. It’s better to start with a green field site than to try and modify an existing one – the apparent efficiencies just aren’t there.” Factories which came on-line in ’95 are two or more generations behind the leading edge and the products they were designed to make are pretty much obsolete, said Corrigan. “The demand is for the new products so the old factories are dying.” The problem for Fujitsu and Siemens is deciding how long they are prepared to maintain the plants to prevent deterioration. While they stay on the companies’ books the plants cost money and cannot be written off. Moreover, they become obsolete quickly. The equipment, representing 80 per cent of a factory’s cost, can be used elsewhere. This makes it more economic to ship the equipment to an operating factory and get some return on its purchase or leasing cost rather than leave it standing idle.


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