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TI to shut two factories, cut 1000 jobs

Posted: 24 Jan 2012     Print Version  Bookmark and Share

Keywords:semiconductor  restructuring  cost consolidation 

Texas Instruments Inc. said it will close two of its older semiconductor manufacturing facilities in Hiji, Japan, and Houston, Texas and lay off over 1000 workers over the next 18 months.

On Monday, TI announced its fourth quarter revenue; costs associated the company's acquisition of National Semiconductor; and restructuring charges associated with the closure of the two facilities.

The company disclosed that its fourth quarter profit fell 68 per cent from last year. Commenting on the financial result, Rich Templeton, chairman, president and chief executive officer, TI, said, "Revenue in the fourth quarter was higher than expected across all our major product lines, reinforcing our belief that we're at the bottom of this downturn."

Combined, these factories supported about 4 per cent of TI's revenue in 2011. Closing these factories, Texas Instruments is expected to save about Rs.510.20 crore ($100 million) annually.

However, production from these sites will be moved to other more advanced TI facilities, the company added.

"The total charge for these closures is estimated at about Rs.1,096.94 crore ($215 million), of which Rs.571.43 crore ($112 million) was incurred in the fourth quarter and the remainder will occur over the next seven quarters."

"These sites have made strong, high-quality contributions over the 30-plus years each has operated," said Templeton. "They demonstrate the tremendous cash flow potential associated with analogue products, where factory lives are literally measured in decades. However, we're now at the point where each of these sites requires significant upgrades, and it makes financial sense to shift production to larger, more advanced facilities."

In addition, TI , which closed its acquisition of National Semiconductor on September 23, 2011, announced that the total acquisition-related charges in the fourth quarter are Rs.1,306.12 crore ($256 million).

Templeton stated, "I'm pleased to say that despite the downturn and the lower factory utilisation that came with it, cash flow from operations was strong and well above levels as compared with similar points in prior downturns. Our strategic focus on our core businesses and efficient investment in capacity are key to our strong generation of cash."

"As we move into 2012, we enter the final phase of our planned exit from the base band market, and thus further tighten our focus on analogue, embedded processing and Wireless."

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