Sanyo abandons Thai production facilities due to floods

Sanyo Semiconductor has decided to abandon its main production facilities in Thailand because of the recent flooding, which badly damaged its machinery and operations.

The company is the first few foreign manufacturer since the disaster to announce an end to most production in the Kingdom.

The company says it will lay off about 1,600 workers and close its plant in Rojana Industrial Park permanently, said Somboon Hotrakul, director of the Electrical and Electronics Institute.

However, he noted, there is currently a labour shortage in this industry.

Sanyo Semiconductor (Thailand), which has operated since 1990 producing semiconductors, transistors and large-scale integrated circuits, will close the flood-ravaged factory on December 25.

The company decided that since it would have to spend a lot of money repairing or replacing the damaged machinery, it would shut down the Rojana plant, though it "plans to maintain limited production at its Bang Pa-in site", according to its website.

Impact on supply chain

Sanyo Semiconductor (Thailand) is a business unit of US-based ON Semiconductor Corporation.

The disruption at Ayutthaya's Rojana Industrial Park had an impact on the supply chain of ON Semiconductor worldwide.

The Rojana operations are estimated to have produced about 5-10 per cent of ON Semiconductor's worldwide output as measured by revenue of US$905.8 million (S$1,166 billion) for the second quarter of this year.

"It has been determined that given the severity of the flood damage to the production facilities ON Semiconductor operates in Thailand, and the excessive cost required to recover and reconstruct these facilities, it is not financially viable for us to fully restart our probe, assembly and test operations in Thailand for an indefinite period, if at all," the company said.

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