On Semi's China JV eyes $30M expansion

On is expanding
China also appears to be playing a more critical role for On Semi. For years, Malaysia has suffered from severe labor shortages. Many electronics concerns in Malaysia must import foreign workers. Labor costs have been soaring in both Malaysia and the Philippines.

In China, there is an abundance of highly-skilled workers. But labor rates are skyrocketing in Shanghai, prompting Intel and others to move their facilities to Chengdu.

Leshan has proven to be a good location for On Semi. In Leshan, ''the labor rates are cheaper than Chengdu,’’ Lee told EE Times in a recent interview at the company’s headquarters here. Lee, who hails from Malaysia, has been with the Chinese venture for 10 years. Previously, he worked for Motorola in Malaysia.

Today, the venture, which has some 2,267 employees, has three plants. The facility assembles and tests miniature surface-mount transistors and diodes in the SOT, SOD and SC series packages at this 200,000-square-foot production facility.

The first two plants are running at or near capacity. In 2008, the venture began production in Plant 3, which is only at 10 percent capacity now. The company has implemented a $30 million expansion plan to boost the capacity to 30 percent. The first part of the expansion plan will start in July.

At present, the venture is producing various devices, which are housed in small outline transistor plastic packages (SOT). SOTs are mature package types, but they are still critical in handhelds and other products. Even SOTs must become ''thinner and thinner’’ for a new class of handhelds emerging in the market, Lee said.

At present, the venture is producing SOT953 (without lead) and SOT963 packages. It is ramping up a SOT1123 package. By 2013, the venture will move into the QFN arena.

As the venture ramps up, On Semi itself has recently regained its profitable status. And now, On Semi is gaining ground in analog, facing product shortages and is on an aggressive acquisition spree.

Following its spin-off, On Semi acquired Cherry Semiconductor Corp. for $253.2 million. Then, starting in 2006, On Semi accelerated its efforts to reshape the company from a commodity discrete supplier into a higher-value analog/mixed-signal vendor.

Several years ago, it raised eyebrows by buying LSI Corp.'s 8-inch fab in Gresham, Oregon for $106.5 million. In 2007, On Semi acquired AMI Semiconductor for $894.1 million. The move enabled On Semi to enter the ASIC, custom chip, foundry and other markets. At the time, On Semi also purchased Analog Devices Inc.'s voltage regulation and thermal monitoring products for $148 million

Then, in 2008, On Semi purchased Catalyst Semiconductor Inc., a supplier of EEPROMs and related nonvolatile memories, for $121.7 million. Continuing on its buying spree, On Semi recently completed the acquisition of EMI chip specialist PulseCore Holdings (Cayman) Inc. for $17 million.

Late last year, On Semiconductor acquired California Micro Devices for $108 million in cash under the terms of a definitive agreement signed by the two companies. That deal is still pending.