Semiconductor equipment maker Entegris Inc. will shut a manufacturing plant and warehouse in Chaska next year in an effort to move some of its business closer to customers in Asia, officials said Tuesday.
The move will mean the loss of 200 jobs, many of which will move to Malaysia, where Entegris has 600 workers. About 150 additional workers in Chaska will be asked to move to other U.S. facilities, including other sites in Chaska. The company didn't specify how many of those jobs would be shipped out of state.
The company said the job reductions will save an estimated $8 million a year beginning in 2010. Entegris officials said they expect to save $12 million a year by streamlining the management structure. The changes will result in about $15 million in charges over the next four quarters.
The news came on the same day officials announced a $411.4 million loss for the third quarter. The loss included $395.3 million in goodwill impairment from the company's decreasing market capitalization. Excluding goodwill, earnings were $6.2 million.
Regardless, the industry is facing hard times. Minnesota semiconductor equipment suppliers such as Entegris, Aetrium Inc. and FSI International say they are bracing for the uncertain times.
Market research firm Gartner halved its 2008 revenue-growth projections for the entire industry this week. And it dropped next year's revenues predictions, saying the industry should grow only 1 percent to $282 billion. That's down from its earlier guidance of $307.7 billion.
Sales decreases are already apparent. At Entegris, third-quarter sales fell from $151.8 million a year ago to $145.8 million.
"The global economic turmoil has exacerbated the cyclical downturn in the semiconductor industry," said Gideon Argov, Entegris president and CEO.
Entegris supplies manufacturing equipment to large semiconductor firms such as Intel, Samsung, Texas Instruments and Taiwan Semiconductor.
Greg Graves, chief financial officer, said the industry has been pinched by reduced corporate and consumer spending on information technology. "You saw just yesterday that Circuit City is closing a big chunk of their stores," Graves said. "It impacts Samsung and Intel, which in turn means it impacts us. I would say that overall, the electronics market is being more negatively impacted than the broader economy."
As a result, Entegris, which had $626 million in 2007 revenue and 3,000 employees around the globe, is working to diversify its businesses. It bought Poco Graphite last quarter, a move that will add to its consumable product revenues, officials said.
Joseph C. Levesque, president and CEO of North St. Paul's Aetrium, which makes equipment for the semiconductor industry, said the impact of the global financial decline deepened as the quarter progressed.
"The industry reacted by slowing capital equipment expenditures, and chip manufacturers remain very uncertain as to how the current financial turmoil will affect demand for their products," Levesque said.
"Should these global conditions persist we expect they will have a continuing dampening effect on capital expenditures by our customers," he added. "Fortunately, our broadening customer base and excellent product lines continue to position us to outperform in most industry conditions."
Chaska-based FSI International reported a fourth-quarter loss of $9.1 million last month on a 29 percent drop in revenue. Like Entegris, FSI's micro-electronic equipment business is restructuring. It reported $4 million in severance and related costs for the quarter.
"Deteriorating economic and industry conditions during the year impacted our overall order level and financial performance for fiscal 2008," FSI Chief Executive Don Mitchell recently told investors. "Given the impact the global financial crisis is currently having on our customers and peers, we need to remain vigilant."
Dee DePass • 612-673-7725
