In a reversal of the usual trend, ON Semiconductor Co. has started moving a chip production line from overseas back to the Valley.
The Phoenix-based hightech firm is transferring production of small-signal transistors from a plant in Seremban, Malaysia, to its headquarters complex at 52nd Street and McDowell Road in Phoenix as part of a plan to increase efficiency by consolidating manufacturing at fewer sites.
In the process, the company is saving 350 jobs at its Zener Rectifier factory in Phoenix, where the production line is being moved.
ON Semiconductor has installed about 75 percent of the equipment that will be needed in Phoenix to begin production in the third quarter of next year, said Walt Guy, vice president of global manufacturing.
The first qualification wafers, which will be used to test the quality of the manufacturing process, are expected to be produced by the end of this year, said John Hall, director of the Zener Rectifier fab.
The process of moving an entire manufacturing line from overseas back to the United States is a first for the company, which was formed in 1999 when Motorola spun off its analog chip manufacturing operations.
"In the past we’ve moved a lot of things from Phoenix offshore, and we had a facility in Guadalajara, Mexico, that we closed and moved some of it here," Guy said. "But we also moved a lot of that to other offshore sites. So this is a first."
The company was able to make the move in part be cause of new lean manufacturing techniques adopted in Phoenix that increased the capacity of the plant by 25 percent without additional capital spending, Hall said.
Engineers achieved that by changing the layout in the fab and reducing losses in the manufacturing process, Hall said. And employees were trained in Six Sigma quality improvement techniques, he said.
"A few years ago, Phoenix was not competitive," Hall said. "Now we’ve gotten to the point where productivity is not as big an issue."
Another reason for the move is that consolidating the manufacturing in Phoenix was cheaper than doing it in Malaysia, Guy said.
"The wafer fab in Phoenix is big while the one in Malaysia is relatively small," he said. "It’s easier to move something small into something big than something big into something small. Malaysia would have required significant amounts of investment over what is required here."
The plant in Malaysia will be used for assembly and testing functions as the company grows, Guy said.
The chips to be manufactured here will be very small, "discrete" devices that perform a single function such as amplifying electronic signals, rather than larger chips that perform many functions such as the complex microprocessors made by Intel Corp.
The ON Semiconductor chips function in conjunction with more complex chips in cell phones, computers and other products, Guy said.
"They are very pervasive. Almost any electronic product has them," he said.
Instead of containing millions of transistors on a relatively large chip, the ON chips contain a single transistor, but the chips are very small, Guy said. Up to 100,000 of the chips are produced on a single 150 millimeter (6-inch) diameter silicon wafer, he said.
The company did not release information on the cost of the move but said it expects to save $25 million to $30 million over five years.