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Dutch chip maker expands its largest factory in Thailand

NXP invests in Thailand

Largest integrated circuit base for Philips

Netherlands-based NXP, the leading semiconductor maker founded by Philips, has poured about US$300 million into Thailand to establish its largest production base for integrated circuit (IC) packaging.

A technician performs a check at an NXP plant. The company is planning its largest integrated circuit base in the world with aUS$300 million investment in Thailand to enable production expansion. NXPis the largest Dutch employer in Thailand with a workforce of about 3,200.

The company generally invests from $5 million to $30 million in Thailand every year, depending on the business cycle, said Theo Halders, vice-president and general manager of NXP Semiconductors and managing director of its Thai unit.

After cutting spending in the past six months after the automotive sector's sudden drop in demand, NXP Manufacturing (Thailand) has started to invest again and to recruit staff as orders have picked up since the second quarter, he said.

"We have seen a strong recovery in business in the previous quarter and the orders for the third quarter are quite good," said Mr Halders.

NXP's plant in Bangkok's Lak Si district is now running close to its maximum capacity, producing 10-15 million chips for export to Europe, the US and Asian markets including Japan and China, he said.

Globally, NXP operates six semiconductor testing and assembly plants in Europe, the Philippines, Hong Kong, China and Bangkok, which is the largest facility, said Mr Halders.

"We are investing in Thailand for two things, the first is production expansion by adding new equipment. At the same time, NXP is relocating high-tech activities from Europe and some products from the Philippines to Thailand," he said.

In 2008, NXP announced a major production restructuring, partly through closing some European plants. This policy has been stepped up this year. A US wafer plant has already been shut down and another one in Europe is to close.

To transfer production from Europe, NXP's Thai unit has strengthened its technical capabilities by hiring more engineers. The company currently employs 350 engineers.

NXP is the largest Dutch employer in Thailand with a workforce of about 3,200, of whom 200 were recruited last month, said Mr Halders. The company, which has been in Thailand for 35 years, aims to hire another 100 staff this year.

But the outlook for the IC industry remains uncertain, largely depending on the global economy, said Mr Halders.

"We still don't know how the economy and the industry will look the rest of the year. If the fourth quarter is reasonably good, we will have roughly the same level as last year," he said.

With net sales of $5.4 billion last year, NXP has a strong position in chips for the home entertainment, automotive and identification markets. Its major customers include Nokia, Philips, Sony and Panasonic.

In Thailand, NXP was recently awarded for the second time the government contract for chips for identification cards. Globally, the company provides 80% of chips for e-passport programmes.

NXP was spun off from Philips in 2006 and the Dutch consumer electronics giant still holds about 20% of the company.

-- Bangkok Post 2009-07-15