BARCELONA, Spain A restructuring of manufacturing, R&D and support at NXP, the former Philips semiconductor division, will cost an estimated $800 million, save $550 million annually and affect approximately 4,500 NXP staff, or about 15 percent of its workforce.
Frans van Houten, president and CEO of NXP (Eindhoven, Netherlands) told a teleconference that “redundancies are inevitable” with the biggest impact coming in the Netherlands, Germany, France and the United States.
A number of plant closures are scheduled to happen during 2009 and 2010 as NXP consolidates its internal manufacturing in Nijmegen, Hamburg and Systems on Silicon Manufacturing Co. Pte. Ltd. (SSMC), a Singaporean joint venture with leading foundry TSMC.
The changes come in response to a challenging economic environment, a weak U.S. dollar, and the reduction in size of the company after moving its wireless business into a joint venture with STMicroelectronics NV, van Houten said. Some of the background to NXP's restructuring was discussed in EE Times last week.
Van Houten said NXP plans to close a fab in East Fishkill, New York in 2009 and close the ICN5 portion of Nijmegen and the ICH part of NXP's Hamburg facility in 2010. In addition NXP plans to sell off or close a pilot fab in Caen, France, during 2009. These steps were necessary because NXP's internal manufacturing facilities were under utilized, van Houten said.
By focusing European manufacturing on upgraded facilities in Nijmegen and Hamburg, the plan would increase the loading in the fabs to over 90 percent, as well as result in expected savings of $300 million on a annual basis by the end of 2010.
The company also plans to make cuts in central R&D and operations where it is looking for $250 million in annual savings. About 3,000 of the job cuts are expected to come from manufacturing and about 1,500 from R&D and operations.
Van Houten said that with the sell off NXP's wireless business to ST, NXP was a smaller company and needed to scale back research.
Moving forward, NXP will focus on its automotive, identification, home, and multimarket chip businesses. Even after the savings NXP would be spending 16 or 17 percent of sales on R&D for these businesses, which was in line with industry norms. These planned changes to produce a more focused central R&D are expected to affect employees primarily in the Netherlands, France and Germany.
The largest number of job cuts are likely to hit in East Fishkill, although 1,300 jobs are likely to be hit in the Netherlands. Of those some 1,050 jobs could go in Nijmegen and 250 jobs in Eindhoven, van Houten said.