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October 17, 2011

ON Semiconductor to shut down wafer manufacturing unit in Aizu, Japan

Closure expected to result in total cash charges of approximately $20 to $25m beginning in Q4 2011; nearly 300 jobs to be axed

By CBR Staff Writer

Semiconductor companmy ON Semiconductor will close its wafer manufacturing facility located in Aizu, Japan, by the end of June 2012.

The closure is part of the company’s overall drive for operational efficiencies and is in line with an ongoing strategy aimed at migrating in-house production to large, high volume fabs, and investing in more advanced wafer technologies, said ON Semiconductor.

The Aizu closure is expected to result in total cash charges of approximately $20 to $25m beginning in fourth quarter of 2011. Once the Aizu facility has closed, the company expects to save a total of approximately $8m per quarter.

The closure of the Aizu facility is expected to result in the elimination of approximately 197 full time and 94 contract jobs currently held by workers at the Aizu site, said the company.

It said that decison to shut down the unit has been taken because the 6-inch Aizu fab is a smaller volume wafer manufacturing facilities. The company also said that the products manufactured in the unit can be produced at other fabs.

ON Semiconductor president and CEO Keith Jackson said it is vital to the growth of the company that the manufacturing technologies keep pace with the advancing needs of customers, and that operations remain competitive.

Jackson added, "The Aizu facility and its dedicated employees have been a valuable asset to the company, producing quality products. The 6-inch Aizu fab, however, is among our smaller volume wafer manufacturing facilities and the products we manufacture there can be produced at other fabs – including some 8-inch production facilities – that will provide better long term manufacturing efficiencies."

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All Aizu products are expected to be fully transferred for production by early 2012. ON Semiconductor teams will begin working closely with customers whose products are produced at the Aizu facility to better enable a smooth transition and uninterrupted product delivery, the company claimed.

"The closure of our Aizu facility is another step forward in the company’s transformation of its manufacturing network," said ON Semiconductor executive vice-president and chief operating officer John Nelson.

"The majority of Aizu’s production will be transferred to company-owned fabs and most of the products currently produced at the 6-inch Aizu fab will be transferred to 8-inch wafer production. Among the expected benefits for both the company and our customers will be higher yields and lower defect rates resulting from the use of newer 8-inch production equipment."

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