Fairchild Semiconductor International Inc. announced Thursday it would consolidate manufacturing operations, exiting the non-volatile memory and hybrid amplifier businesses and closing several plants as the company focuses on its core power analog and discrete semiconductor businesses.
The South Portland, Maine, semiconductor supplier said it would incur pretax charges of $77 million in its second quarter, resulting in a net loss of $63.8 million, or 54 cents per share, on sales of $347.1 million. Without the charges, Fairchild would have earned $3.8 million, or 3 cents per share.
In the year-ago quarter, Fairchild lost $13.0 million, or 12 cents per share, on sales of $360.5 million.
During a conference call with analysts, Kirk Pond, president and chief executive of Fairchild, said the increasing need for power management in vehicle electrical systems, battery-operated products, and other electronics was spurring demand for IGBTs, analog power switches, and other power semiconductors. The company now derives 70% of its sales from power-related devices, he said.
"The power market has grown four times faster than the rest of the semiconductor industry," he said. "We want to extend our lead as the top supplier of power devices."
Market research firm Gartner Inc., San Jose, ranks Fairchild the top global supplier of discrete power devices and second-leading supplier of power analog devices.
Fairchild said it would discontinue manufacturing non-volatile memory and hybrid amplifier devices and consolidate manufacturing of optoelectronics products. The company would close or sell plants in Kuala Lumpur, Malaysia; Wuxi, China; and Loveland, Colo. It would also consolidate fab lines and close its 4in. fab in South Portland, Maine.
Revenue from the exited businesses are $5 million to $6 million per quarter, according to Pond, who expects the restructuring actions to result in annual cost savings of $53 million to $58 million next year.
Fairchild expects the third quarter to be seasonally down with revenue 4 to 6% lower than the second quarter.