MEMC Closing Two U.S. Plants, Cutting 540 Jobs |
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Posted By: Technology Staff Editor In: Information Technology
written by Dylan McGrath, courtesy of EE Times
SAN FRANCISCO—Silicon supplier MEMC Electronic Materials Inc. will close two U.S. manufacturing facilities and cut about 540 jobs in order to cut costs.
MEMC said it would cease production of silicon crystal ingots and wafers at facilities in Sherman, Texas, and at company headquarters in St. Peters, Mo. These closings will occur in stages in 2010 and early 2011, as production shifts to other locations, MEMC said.
Due partly to a production glitch, MEMC also lowered its third quarter revenue guidance. The company said it now expects third quarter revenue to e between $285 million and $315 million, down from a previously announced target of $300 million to $350 million. The company lowered its gross margin estimate for the third quarter to 12.3 percent.
MEMC disclosed a disruption in production at the company's polysilicon facility in Pasadena, Texas, due to an equipment failure that occurred Aug. 7. MEMC replaced the failed equipment, but , subsequent rebuild and restart difficulties have delayed the resumption of normal operations at the facility, the company said. MEMC does not expect the Pasadena facility to resume normal production levels before the end of this month.
The lost production and related costs are expected to negatively affect the company's revenue and margins in the third quarter, MEMC said.
Silicon wafering operations in St. Peters are expected to cease by the end of the second quarter of 2010, MEMC said. Epi and crystal operations at that location are expected to cease by the end of the first quarter of 2011, the company said. The MEMC corporate headquarters, as well as research and development and silicon on insulator manufacturing, are expected to continue at the St. Peters location, the company said.
Production at the Sherman facility will be phased out by the first quarter of 2011, MEMC said. The company said it then intends to sell the facility.
"We recognize that this decision will adversely affect many of our employees at these locations, and consequently these steps were not taken lightly or planned for any sooner than absolutely necessary to advance our strategic goals," said Ahmad Chatila, MEMC president and CEO, in a statement. "We are announcing our plans now to give affected employees a significant transition period, and we will be putting severance and assistance programs in place for those employees who will not continue with MEMC."
MEMC said it expects to incur charges of roughly $18 million for severance benefits to the impacted employees. The company also anticipates charges of approximately $55 million to $60 million for contract terminations and other related move costs associated with the closings, MEMC said. The company expects that the facility closings will result in an annualized savings beginning in third quarter of 2010 of approximately $10 million, rising to approximately $55 million of annualized savings beginning in the second quarter of 2011, MEMC said.
A small number of employees from the two facilites being closed will be offered positions at other MEMC locations, the company said.
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