National Semiconductor Corp, which set up operations in Singapore in 1968, will close its chip-assembly plant in the city-state, as it joins companies such as Maxtor Corp in moving to lower-cost countries.
The factory, located in the Toa Payoh district, will be shut by the end of next year and 950 jobs will be eliminated, Santa Clara, California-based National Semiconductor said yesterday in a statement. The company expects moving the plant's operations to China and Malaysia will save up to US$6 million a quarter.
National Semiconductor follows Maxtor, the world's second-largest maker of computer-disk drives, and Creative Technology Ltd in cutting jobs in Singapore and moving elsewhere in Asia.
The companies are shifting manufacturing closer to their customers and taking advantage of lower labor and land costs in countries like China and Malaysia.
"It's a reflection of the kind of trends we're seeing in terms of manufacturing bases moving," said Alan Richardson, who helps manage US$2.8 billion at Baring Asset Management in Hong Kong. "Temporarily there could be an impact but in the longer term, as the country diversifies away from low-end contract manufacturing in technology and other related industries, the impact will be neutralized."
The migration is pushing Prime Minister Lee Hsien Loong (
The city-state is building casinos, convention space and a business district at a downtown waterfront site to draw new investment as it tries to temper three decades of reliance on electronics manufacturing.
Electronics factories account for 32 percent of Singapore's manufacturing output. Manufacturing makes up a quarter of the US$107 billion economy.
Singapore's government expects economic growth to slow to between 2.5 percent and 4.5 percent this year from 8.4 percent last year.
Maxtor in March said it would close its plant in Singapore and cut 5,500 jobs as it moves production to China. Hitachi Ltd in 2001 cut 550 jobs after the company closed its television and vacuum cleaner factory in Singapore and shifted operations to China, Indonesia and Thailand.
Closing the Singapore plant will cost National Semiconductor US$27 million to US$30 million this quarter, the company said.
The company is also stopping the production of digital chips, which it mostly manufactures in Singapore, spokesman Jeff Weir said. Analog chips that are used in devices such as Apple Inc's iPod are more profitable.
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