Freescale Won’t Reopen Plant in Japan Damaged by Earthquake
April 06, 2011, 4:01 AM EDTBy Ian King
April 6 (Bloomberg) -- Freescale Semiconductor Inc., the chipmaker partly owned by Blackstone Group LP, won’t reopen a factory in Sendai, Japan, that was damaged by last month’s earthquake.
Safety concerns and damage to infrastructure mean the plant, which had already been scheduled to close in December of this year, won’t return to full operation, Austin, Texas-based Freescale said in a statement.
“We will not rebuild and reopen the plant,” Freescale Chief Executive Officer Rich Beyer said in a phone interview. “The damage is substantial.”
The chipmaker, planning to raise $1.15 billion in the largest initial share sale by a U.S. technology company since Google Inc. went public, ceased operations at Sendai after the March 11 earthquake and tsunami that struck northeast Japan. Freescale staff evacuated the site following the disaster.
Chip plants typically run 24 hours a day and are vulnerable to power outages that can ruin months of work. Freescale followed larger rival Texas Instruments Inc. in saying factories in the area had been damaged.
Freescale will concentrate on transferring work to alternative facilities, it said in the statement.
The Sendai plant, which makes chips used in cars, was being closed as part of a companywide effort to cut costs. Freescale, owned by a group of private equity companies including Blackstone, filed on Feb. 11 to sell shares in an IPO.
The chipmaker is continuing to provide assistance, including shipments of food, water, clothing and emergency supplies, to its Sendai employees. It will pay them until their December severance date, it said.
“We’re going to take care of our employees,” Beyer said.
The Sendai plant was built in 1987 as a joint venture between Tokyo-based Toshiba Corp. and Motorola Inc., Freescale’s former parent. Freescale has 600 employees at the site.
--Editors: Tom Giles, Terje Langeland
To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
