ON Semi ramps East Fishkill fab for Covid-19 recovery

ON Semi ramps East Fishkill fab for Covid-19 recovery

Business news |
By Nick Flaherty

ON Semiconductor is ramping production at its 300mm fab in East Fishkill, New York, as it sees a bounce from the Covid-19 pandemic.

“During the second quarter, we started our first 300mm wafer production at the East Fishkill fab. We are currently sampling our 300mm products to customers, and we expect to recognize our first 300-millimeter revenue in the third quarter,” said Keith Jackson, CEO of ON Semiconductor. “We are very pleased with our accelerated progress in ramping our 300-millimeter manufacturing processes. The yields have been spectacular and we expect to see a meaningful positive impact on our gross margins as our 300-millimeter manufacturing ramps up in the coming years.”

The 300mm fab, bought from GlobalFoundries, can produce 20 percent of the company’s business, around $1.1bn, and the focus for moving production from other fabs.

This comes as the company looks to sell its plant in Niigata, Japan, that it acquired from Sanyo, and follows a similar deal for its fab in Oudenaarde, Belgium announced in February

Like the former AMI fab, the Niigata facility is an automotive qualified facility which meets the IATF 16949 global industry standard for quality management. The two co-located 200mm-capable wafer fabs have 215,000 square feet of clean room space on a 40 acre campus with 1.1 million square feet of building space acquired from Sanyo.

ON Semi says it remains committed to growing its presence in Japan, adding a large eight-inch wafer fab in Aizu to its manufacturing footprint.

“This announcement comes on the heels of our announcement in February regarding our plan to transition production from our 6-inch automotive-centric fab in Belgium,” said Jackson. “Our 300mm manufacturing capability in the East Fishkill fab has afforded us significant flexibility which has enabled us to optimize our network.”

Revenues for the second quarter of 2020 were $1.21bn, down 10 percent on Q2 2019 and down 5 percent on the previous quarter as a result of the Covid-19 pandemic. “Despite disruption from COVID-19 pandemic, we continue to make strong progress towards our key strategic initiatives,” said Jackson. “We are beginning to see moderate recovery in demand across most end-markets and geographies, and we expect this recovery to continue in near term driven by improving global macroeconomic activity.”

At the end of the second quarter, there were 140 days of inventory on hand, which is higher than others in the industry, and up by nine days as compared to 131 days in the first quarter of 2020. This was driven by expectations of recovery in demand in the second half of the current year to make sure there is no disruption to supply.

“We’re beginning to see recovery in the automotive market in the US and Europe,” said Jackson. “Conversations with customers indicate that we should see ongoing recovery in the third and in the fourth quarter of the current year. We are seeing strong momentum for our silicon carbide and silicon products for electric vehicles. We recently won a very significant design with one of the leading global automotive OEMs for our silicon carbide power module for traction inverters for electric vehicles. We expect to start seeing revenue from this win a year from now. Based on our current engagement with various automotive OEMs, we expect to win multiple designs in the near to mid-term,” he added.

“So we did continue to have supply constraints or pandemic-induced supply constraints in the second quarter that was reflected in the total numbers. They are much less in the third quarter and we’re hopeful that there will be none before the end of the year. But at this stage, again, everything is still unknown if there’s flare-ups or changes around the world; there’s still risk.”

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