STM Cuts 4,000 Jobs, Closes 3 Plants

After deconsolidating its Flash memory business in December, STMicroelectronics will close three of its manufacturing plants, cutting about 4,000 employees worldwide. Its 6-inch (150mm) wafer fab in Carrollton, Texas, its 8-inch (200mm) fab in Phoenix, Arizona and its back-end packaging and test facility in Ain Sebaa, Morocco, will be phased out within two to three years. These measures follow ST's plant to migrate most of its global 6-inch wafer production to less-expensive 6-inch fabs in Singapore or to finer-geometry 8-inch facilities around the world. As a result, most of ST's 6-inch fabs in Europe were phased out or converted to 8-inch manufacturers, saving ST more than $150 million per year, according to a company release. ST's 6-inch wafer manufacturing facility in Carrollton had previously been spared from the consolidation, but did not survive the most recent round of cuts. Its Phoenix wafer production plant is a relatively small 8-inch facility using mature technology, but would require substantial investments to be upgraded, the company said. ST will shift Phoenix's capacity to other plants or subcontractors in Asia and Europe. The older Ain Sebaa (Casablanca), Morrocco plant is unsuitable for upgrading due to its age and location, according to STM, and some of its mature product lines will be transferred to subcontractors. "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," Carlo Bozotti, President and CEO of STMicroelectronics, said in a statement. "We will manage a smooth transition for the benefit of our customers and of the employees affected by these measures." Once they are completed, the Company expects these measures to generate approximately $150 million per year in savings in the cost of goods sold. The related pre-tax impairment and restructuring charges are expected to be in the range of $270 million to $300 million, including approximately $250 million in cash charges.