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Top Six Critical Elements for a Successful Fab Sale

24 May 2011

Semiconductor industry volatility, pricing pressures, and the exorbitant capital / operational expenditures necessary in the pursuit of Moore’s Law have left many companies with little option but to pursue a fabless or fab-light model. Yet many companies try, but few succeed in selling their fabs given a dearth of supply and limited demand for these assets in the US and Western Europe. More often than not, the fabs are closed, manufacturing equipment dispersed, and the seller is forced to sell the buildings and land for a fraction of their value after spending millions of dollars in extended marketing and decommissioning costs.

The market for semiconductor facilities in the US and Western Europe is out of equilibrium with the supply of fabs outstripping demand for the facilities. The imbalance is largely due to memory companies shedding 200mm assets in favor of 300mm platforms, companies investing in lower-cost regions, particularly Asia, and the increasing trend toward foundry production. This results in downward pressure on fab sale prices, the potential for extended marketing times (which can stretch from three to eight years), and increasing pressure to close facilities and pursue alternative uses for land and buildings.

Using a series of real-world customer success stories, this paper examines the six most important elements in a successful fab sale, and outlines an easy-to-follow roadmap for companies that wish to avoid year-long marketing efforts, and instead create a win / win / win for their companies, their employees, and the communities where these facilities are located.

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