Monday, semiconductor equipment maker ASM International N.V. (ASMI) said it is accelerating its already announced cost reduction and restructuring program aimed at consolidating its global front-end manufacturing operations and transfer it into a "strong" profit making organization. The action is expected to result in a reduction in employee strength, and the company expects to incur restructuring charges in fiscal 2009.
The company noted it is increasing and accelerating the cost reduction target to at least 40%, compared to the fourth quarter run rate, to be realized in the first half of 2010, which is six months earlier than previously announced.
ASMI intends to consolidate its global front-end manufacturing operations from Europe, the United States and Japan into its front-end manufacturing operations in Singapore by the end of 2010.
To achieve working capital reductions, the company plans to complete the previously announced transfer from Almere, the Netherlands, phase out of the manufacturing operation in Phoenix, Arizona in the first half of 2010, and transfer manufacturing from Nagaoka, Japan, no later than the fourth quarter of 2010.
By simplifying and streamlining warehousing operations and by strengthening of the Global Sales & Service organization, the company plans to reduce selling, general and administration expenses.
ASMI expects the actions to result in restructuring charges of about 60 million to 70 million euros to be accounted in the 2009 accounts and the associated cash flows distributed relatively evenly over 2009 and 2010. The amounts include non-cash charges of an estimated 10 million euros related to impairment of assets.
In addition, partly as a result of the current prolonged contraction in the semiconductor industry, the company plans an inventory write-down of about 20 million to 25 million euros in the 2009 second quarter results, which will be announced on July 29.
ASMI closed Friday's regular trading session at $16.35.
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