NXP Semiconductors has announced a redesign program aimed at bringing the company to a healthy financial situation. The changes come in response to a challenging economic environment, a weak US dollar, and the reduction in size of the company after moving its wireless business into a joint venture with STMicroelectronics.
According to the company, the redesign program includes reduction of the company’s manufacturing base, its central R&D, and support functions. This program is expected to affect approximately 4,500 people globally and will result in annualized savings of $550 million. The restructuring cost will result in an estimated cash out of $800 million. Moving forward, NXP will focus on its automotive, identification, home, and multimarket businesses.
As a result four factories are planned to be sold or closed. The fab in Fishkill, New York, will be closed in 2009. Additionally, two other factories are planned to be closed by 2010: the ICN5 part of the NXP facility in Nijmegen, Netherlands, and part of the ICH fab of the Hamburg facility, Germany. NXP’s fab in Caen, France will be put on the market for sale.
Frans Houten, CEO of NXP Semiconductors, said: This restructuring is a tough measure and it is regrettable that we need to let people go. However, the changes will make NXP a strong, profitable and growing company, with a positive cash flow. NXP is transforming into a globally competitive semiconductor company with scale and leadership in its core businesses.