STMicroelectronics to Close Three Plants, Cut 4,000 Jobs
European chip maker STMicroelectronics said it will close manufacturing plants in Texas, Arizona and Morocco, cutting 4,000 jobs. The company currently employs more than 50,000 people worldwide, according to its Web site.
Once the changes are complete, the company said it expects to save about $150 million per year in the cost of goods sold. It also expects pretax impairment and restructuring charges in the range of $270 million to $300 million, including about $250 million in cash charges.
The factories are being phased out in Carrollton, Texas; Phoenix, Arizona, and Ain Sebaa, Morocco, over two to three years. The company said it expects to offer transfers or "transition-based incentives" to most of the affected employees.
"Growing revenue is important, but we're also committed to improving our cost structure by reducing the number of our manufacturing sites and, as a result, trimming excess capacity and lowering manufacturing overhead," said President and Chief Executive Officer Carlo Bozotti in a press release Tuesday. "We will manage a smooth transition for the benefit of our customers and of the employees affected by these measures."
STMicroelectronics said the closings follow its completion of a plan to move most of its worldwide production of 6-inch wafers to "operationally less expensive 6-inch fabs in Singapore or to finer-geometry 8-inch facilities around the world."
In May, STMicroelectronics and Intel announced that they would create a new independent semiconductor company that will supply flash memory devices for cell phones, MP3 players, digital cameras, computers and other high-tech equipment.
Under terms of the agreement, STMicroelectronics will sell its flash memory assets, including its NAND joint venture stake, to the new company while Intel will sell its NOR assets and resources. NOR flash is a technology that flash devices use to store and run code, usually in small capacities.
The deal signals the waning importance of NOR flash. Invented by Intel in the late 1980s, it has been steadily losing ground to NAND flash memory -- a cheaper alternative that's used in digital cameras and music players.
STMicroelectronics shares rose 11 cents to $19.61 in after-hours trading. The stock had closed down 23 cents at $19.50 in the regular session.