MONTE CARLO, Monaco Freescale Semiconductor is closing its six inch fab in Toulouse, France, as well as another similar size line at Sendai in Japan, as part of its ongoing restructuring plans.
The news came as the troubled chip maker reported first quarter net income of $1.8 billion, boosted by a $2.3 billion gain on the elimination of a portion of its long-term debt, but revenue decreased 40 percent on continuing weakness in demand.
Freescale said it has started discussions with employees at its Toulouse, France, plant with regards to the closure of the facility.
Although Freescale reported net income of $1.8 billion for the three months ended April 3, this was not because the company's overall performance showed significant improvement but was due to fiscal actions taken during the period to cut long-term debts.
Severance payments relating to the disposal of the cellular handset business will be approximately $70 million.
Total severance costs across the whole company will be $270m, including the severance costs for the handset business, and this should result in savings of $700m a year by 2010.