SAN FRANCISCO—ON Semiconductor Corp. has decided not to restore production at two of its three Thai test and assembly facilities damaged by flooding earlier this year.
The decision two shutter two former Sanyo Semiconductor facilities in Ayuttha, Thailand was made based on severity of the damage and the expense that would be required to repair them, the company said. About 1,600 employees will be laid off as a result of the closures, according to the company.
"It has been determined that given the severity of the flood damage to the production facilities ON Semiconductor operates in Thailand, and the excessive cost required to recover and reconstruct these facilities, that it is not financially viable for us to fully re-start our probe, assembly and test operations in Thailand for an indefinite period, if at all," the company said in a statement posted on its website.
ON Semi (Phoenix) said it is ceasing all production at the Ayutthaya sites and plans to maintain limited production—a pilot line—at its Bang Pa In site, formerly belong to Catalyst Semiconductor. That facility is located on the second and third floors of a building in an industrial park, a spokeswoman for the company said.
As a result of the closures, roughly 1,600 manufacturing employees in Thailand will be let go with severance, according to a company spokeswoman. The company will have about 90 employees in Thailand after clean up, the company said.
Some products impacted by the floods are expected to be available before the end of the year, the company said. But ON Semi still expects it will take multiple quarters to restore pre-flood production capacity.
The sites in Thailand have been shut down since early October. The prolong unavailability of these sites has caused major disruptions to the company's global supply chain, specifically for the Sanyo Semiconductor division and some of the former Catalyst products acquired in 2008, the company said.
The bulk of ON Semi's Thailand operations will be permanently transferred to other existing company facilities in Malaysia, the Philippines and China with available production equipment capacity and excess floor space, the company said. Some of the work will be transferred to external subcontractors, the company said.
Some of the equipment from the flooded Thailand sites has been successfully recovered, ON Semi said. The company will purchase additional equipment to reestablish production lost to the flooding, the company said.
"From a global business standpoint, ON Semiconductor is focused on recovering production as quickly as possible to support the needs of our impacted customers as well as for the long term financial well-being of the company," the company said in the statement on its website.
More than 650 people perished as the result of massive flooding in Thailand that began in July. Many factories in the country remain closed as a result of the flooding. According to the World Bank, the floods have resulted in more than $45 billion in damage.
Also Friday, Smartrac NV, a Dutch supplier of RFID transponders, announced that it restarted production at its five manufacturing facilities in Ayutthaya. Smartrac said it was able to restart production earlier than expected due to rapid draining and cleaning work, the "relentless effort" of its local team and help from suppliers and partners.