Other cost-reduction initiatives include temporary site shutdowns, a hiring freeze, the elimination of bonus payments, and strict controls over all discretionary spending.
The company plans factory shutdowns for four to six weeks in the first and second quarter of 2009, three weeks of unpaid leave for senior executives, and two weeks of unpaid leave or a four-day work week for other employees.
The company expects the initiatives to reduce total fixed costs by approximately $40m to $50m a quarter, of which approximately $10m to $15m will be from temporary actions. It said the moves are expected to reduce to approximately $340m the revenue required for quarterly cash breakeven.
The company also revised its fourth quarter 2008 revenue outlook to $480m to $490m from $500m to $550m.
Keith Jackson, president and chief executive at ON Semiconductor, said: In the fourth quarter of 2008 we utilized approximately $49.4m of cash to repurchase $60.9m of our zero coupon convertible senior subordinated notes and still managed to grow our cash and cash equivalents balance by around $30m to approximately $450m. Based on the limited visibility we have for the first quarter of 2009, we anticipate another challenging quarter for the semiconductor industry and the company with revenues down more than normal seasonality.
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