Analog to focus on Irish plant

ANALOG DEVICES’ Limerick plant received a boost yesterday when the American computer-chip manufacturer announced it would shut a facility in California and shift production to Ireland.

The company, which has been in Limerick for nearly 30 years and currently employs 1,300 people there, said it would save $45 million (€37.5m) per year by consolidating its wafer fab operations in two centres Limerick and the American state of Massachusetts.

California lost out because these plants were already equipped with the "most advanced process technologies" in the group, Analog said. The decision was expected to boost capacity and lower overall manufacturing costs.

Analog president and chief executive, Jerald Fishman, said: "By focusing our capital investments in our largest and most advanced facilities, we expect to not only improve cost effectiveness, but also expand the capacity of our global manufacturing infrastructure to support our long-term growth objectives.

"Our new global manufacturing infrastructure will allow us to increase our investments in value-enhancing analogue process technologies, while simultaneously lowering our manufacturing costs.

"The new infrastructure will still allow us to double our global wafer production capacity with relatively small increases in capital equipment spending."

The company will spend around $50m (€41.6m) in transfer-related costs over the next 12 months, with half of the bill accounted for by redundancy payments. It also updated the market yesterday on its current financial outlook, saying revenue for the fourth quarter was expected to be 6% higher than the previous quarter.

Sales of both analogue and digital products were expected to be higher, while there was also positive news on the outlook for gross margins.

But the company said it would move to take advantage of a tax break currently on offer from the authorities in America and repatriate over $1 billion (€830m) in cash held overseas.

Analog said it had until the end of October to bring the money home and avail of a special low tax rate, introduced to encourage multinationals to repatriate funds. The move would result in an extra tax expense of $49m that would be included in the current year's figures, it said.