SOUTH PORTLAND — Fairchild Semiconductor will lay off 120 workers over the next nine months in a restructuring effort, the company announced Wednesday.
The South Portland-based manufacturer of silicon chips for electronics said the layoffs will make it more competitive domestically and internationally.
Videos
The cuts will affect workers at all levels at the company’s plant on Western Avenue in South Portland, which now has 500 employees. Fairchild has 800 employees statewide.
As part of the restructuring, the company will close a production line in the plant that makes 6-inch silicon wafers and focus production on a line that makes 8-inch wafers. The wafers, which look like compact discs, are cut into thousands of squares to make the semiconductors.
The company said some production of 6-inch wafers will be transferred to the 8-inch wafer line, which also is in the plant.
“We are restructuring the South Portland manufacturing operations to drive higher productivity, lower costs and greater return on assets,” the company said in a news release. “This will provide a solid foundation for sustainable job creation, future growth and cost competitiveness in a global environment.”
Company officials would not provide further details about the restructuring or the timing of the layoffs.
Fairchild’s Western Avenue plant primarily makes analog and power management circuits for mobile phones, a product that the company said is “extremely cost-sensitive.” Chip prices are expected to drop by double-digit percentage points in the coming years, the news release said.
Fairchild’s restructuring is “the right move,” said Craig Berger, an analyst with the Arlington, Va.-based investment bank FBR Capital Markets.
He said domestic regulations, taxes and fees have hindered chip makers’ ability to make money in the United States.
“You can’t make this stuff here and make money. If you want to make money, you have to go Taiwan or China,” he said.
Berger said Fairchild’s effort mirrors restructuring and cost-cutting by competitors like Texas Instruments and National Semiconductor.
“Fairchild has to do that. If they don’t, they won’t be cost-competitive and will lose their business,” he said.
Berger said that, lately, Fairchild has been doing “better than ever.”
He said that under the leadership of CEO Mark Thompson, who joined the company in 2005, Fairchild has become more stable, reduced the cyclical volatility of sales and built a positive reputation among investors.
Since September, Fairchild’s stock has increased from less than $8 a share to nearly $16.
Fairchild said workers who lose their jobs will get assistance finding new positions plus a period of severance pay and benefits.
In December, the company announced the restructuring and said layoffs were expected. At the time, Fairchild spokeswoman Patti Olson said the decision to cut jobs was made by local managers after an evaluation of the plant’s expected output in 2011.
Fairchild’s silicon chips are used in cell phones, automobiles, electronics and other consumer products and are shipped worldwide.
The company has manufacturing plants in Salt Lake City, Mountain Top, Pa., and South Korea.
Staff Writer Jonathan Hemmerdinger can be contacted at 791-6316 or at:
jhemmerdinger@mainetoday.com
Send questions/comments to the editors.
