Chip vendor ON Semiconductor Corp. plans to close a Japanese backend test and assembly facility operated by its Sanyo Semiconductor subsidiary as part of a cost reduction plan that will eliminate an estimated 800 to 900 jobs.
ON Semi (Phoenix) plans to close the Sanyo plant in Hanyu, Japan, by the end of the second quarter of 2014, the company said in a regulatory filing made with the U.S. Securities and Exchange Commission. The closure will result in the layoff of about 170 full time workers and 40 contract employees, ON Semi said.
ON Semi also initiated a voluntary retirement program for Sanyo employees. The voluntary retirement program is expected to reduce the number of Sanyo employees by between 600 and 700, ON Semi said. The company expects to record cash charges of between $40 million and $48 million as a result of the program. It expects the program to save the company roughly between $36 million and $45 million per year.
As a result of the Hanyu test and assembly facility closure, ON Semi said it expects to incur $11 million to $16 million in cash charges, including severance costs and employee benefit plan expenses. The company expects the closure to save about $4 million per quarter beginning one year after closure.
On Semi acquired Sanyo's semiconductor business in 2011. Last year, ON Semi eliminated about 10 percent of Sanyo Semiconductor employees.
A spokesperson for ON Semiconductor did not immediately respond to request for comment on the facility closure and job reductions.