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Sipex to outsource manufacturing to China

Posted: 05 Sep 2005 ?? ?Print Version ?Bookmark and Share

Keywords:silan-ic? bicmos?

Sipex Corp. plans to close its U.S. wafer manufacturing facility and outsource manufacturing to a Chinese company, Sipex said Thursday (Sept. 1).

Sipex said it has signed a term sheet outlining a planned strategic relationship with Hangzhou Silan Integrated Circuit Co. Ltd. (Silan-IC), a BiPolar and BiCMOS manufacturing company with two fabs in China's Xiasha economic and technology development area outside of Shanghai.

Plans call for Silan-IC to eventually take over the manufacturing of products currently made in Sipex' Milpitas, CA fab and to acquire a substantial portion of that fab's equipment.

Upon the execution of definitive agreements, Sipex will immediately begin transferring its current Bipolar and BiCMOS processes to Silan-IC, a transition expected to take between nine and 12 months, Sipex said. The company said it further expects to license certain products to enable Silan-IC to sell in the greater China marketplace. The two companies also expect to cooperate in product designs in the future.

"This relationship is the start of the new reality of our business as China becomes a significant manufacturer and procurer of analog products," said Ralph Schmitt, Sipex CEO, in a statement. "We need a new progressive model to be successful in the fastest growing market in the world."

Sipex said it anticipates recording restructuring and asset write-down charges in connection with the Milpitas fab closure. The company said it would provide more information on these charges in forthcoming regulatory filings with the U.S. Securities and Exchange Commission. The company added that the relationship with Silan-IC is still subject to the successful negotiation of definitive agreements, transfer of Sipex process technologies and the successful qualification of such processes and wafer testing.

Schmitt said the company concluded that it was no longer economically feasible to keep the Milpitas fab operational because the fab's process capability was insufficient to meet the company's product needs.

"The sacrifices made by the people we expect to lay off due to this strategic manufacturing transition are greatly appreciated by me and by our stockholders," Schmitt said. "We will need their continued support and cooperation in order to properly meet our customers' needs during the transition period."

Sipex did not disclose the total number of layoffs expected as a result of the transition.

Fan Wei-Hong, general manager of Silan-IC, said in a statement that Sipex would help his company continue to build its position in China.

"We have great synergies in power and optical products," he said, adding that the companies have already discussed further collaborative efforts.

- Dylan McGrath

EE Times

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