An Arizona-based company has purchased Fairchild Semiconductor for $2.4 billion. The merger is expected to provide millions in cost savings for ON Semiconductor, but the fate of the Fairchild’s South Portland facility is unclear.
This acquisition has been in the works since last November, but it has taken months for ON Semiconductor to get the necessary regulatory approvals. Last week, the company got final clearance.
In a conference call with investors Monday, ON semiconductor president Keith Jackson welcomed Fairchild employees.
“I am confident that the immense talent and dedication of our newest employees will accelerate our progress toward building a world-class power management company,” he says.
Jackson says the merger will not only create a strong leader in the semiconductor industry, it will also translate into overall cost savings for the company: $160 million in the first 18 months, and $225 million by the end of 2019.
“This is what’s been happening in the semiconductor industry for about the past two years or so,” says Ian Ing, a semiconductor industry analyst from MKM Partners in Connecticut. “Companies are — instead of growing organically, growing their existing businesses, and getting revenue and earnings growth, they’re finding that it’s easier, or a better path, to acquire other companies and get some of the scale and synergies that way.”
It’s unclear how the acquisition will affect Fairchild’s manufacturing facility in South Portland. According to the Maine Department of Labor, Fairchild is the 24th largest employer in Cumberland County, with between 501 and 1,000 employees.
But Ing says given that the projected cost savings are more on the operations side — $120 million, compared with $30 million for the manufacturing side — it may be a good sign for the South Portland facility.
“It’s more on the head-count side than the operating assets, so it’s possible they keep some of the manufacturing assets moving forward, I would say,” he says.
South Portland Assistant City Manager Joshua Reny says he’s also optimistic about the future of ON Semiconductor in Maine.
“We have no indication that anything is going to change, but we’re looking forward to meeting with the new company officials and current management staff and learning more,” he says.
Ing says the two semiconductor companies complement each other. ON offers products to a broad range of markets, from automotive to industrial to communications, while Fairchild’s focus is on power.
