STATS ChipPAC to shut down Malaysia plant

STATS ChipPAC has announced its plan to consolidate its leaded wirebond packaging and related test operations in Kuala Lumpur, Malaysia into its Qingpu, Shanghai, China operations over several phases in 2013 and 2014. The company also revealed the closure of its Malaysia plant by the end of next year.

Tan Lay Koon, president and CEO, STATS ChipPAC, said, "The announced plan will consolidate our manufacturing footprint into larger scale plants and achieve a more competitive cost structure over the longer term."

The company expects to incur total charges of nearly $39 million, comprising employee severance and benefit costs of about $19 million, non-cash asset impairment charges of roughly $18 million and other associated costs of about $2 million. Of the total charges, nearly $37 million and $2 million will be incurred in 2Q13 and in 2014, respectively.

"The plant closure will affect about 1,100 of our employees in Malaysia, representing nearly 11 per cent of our total global workforce. The company will ensure that fair severance benefits and outplacement support will be provided to affected employees," stated Koon.

The consolidation into China will position the company to better engage its customers with broader product offerings and at a more competitive cost structure for its leaded wirebond solutions.