KUALA LUMPUR, Oct 28 — Leading flash memory chip maker Spansion will close its Shah Alam plant by the end of the first quarter next year.
The NOR flash memory vendor said in a statement today that most of its production activities at the Shah Alam plant would have been shifted to its Bangkok facility by then.
Some 650 jobs will be cut as the result of the closure.
California-based Spansion said the move was part of a company-wide cost cutting plan “to align costs with current market demand”.
Spansion senior vice president of human resources Carmine Renzulli said the closure would be done in phases, with production expected to cease by end December.
He said Spansion chose to consolidate its overseas test and assembly operations in Bangkok and not Shah Alam as the first plant had “significantly more equipment” geared towards making the kinds of products it would focus on in future.
Much of the work in Shah Alam revolved around wireless products, which the company decided to move out of two years ago in favour of its core embedded business, Renzulli explained.
“Some of the equipment from here will be moved there but if you went the other way around, it would be significantly more in cost,” he told The Malaysian Insider.
Renzulli also said that Bangkok offered a customer base with “a lot more future work”, adding that the Shah Alam plant had been operating below capacity as orders have been slow following a drop in demand for electronics worldwide.
He stressed that Spansion’s decision had nothing to do with the ease of doing business in Malaysia, which the Najib administration has pledged to improve.
“It’s no harder or easier at one location than another. There’re little different rules here and there but, in essence, it’s a non-factor,” he said.
Renzulli added that Spansion will also cut another five per cent from its remaining 3,000 staff worldwide, including workers at its Austin, Texas assembly plant.
The EE Times reported yesterday that Spansion expects to save US$30 million (RM93 million) per year by shutting down its test and assembly plant in Shah Alam.
Spansion reported third quarter sales of US$258.2 million yesterday, a drop of 14 per cent from the previous quarter and down 19 percent compared to the same period last year.
Sales are expected to further decline to between US$205 million and US$225 million next quarter.
Spansion emerged from bankruptcy last May, 15 months after filing for Chapter 11 bankruptcy protection in the US.