Vishay Intertechnology, a well-known manufacturer of discrete semiconductors and passive components, will undergo a major restructuring as part of its Vishay 3.0 growth strategy. The company announced on September 24 that it will streamline its operations, including consolidating its manufacturing facilities and reducing its workforce.
The restructuring will involve the closure of three manufacturing plants: a diode packaging plant in Shanghai, China, and two resistor plants in Fichtelberg, Germany and Milwaukee, Wisconsin, U.S.
The closures of these plants are expected to be completed by the end of 2026, with production transfers beginning in the fourth quarter of 2025.
The plant closure will result in a reduction of approximately 365 direct employees, or 2% of Vishay's manufacturing workforce. In addition, the company will immediately streamline its sales, general and administrative functions, affecting approximately 170 employees, or 6% of its total workforce.
There will also be various changes to manufacturing operations and production transfers, which will result in a reduction of 260 employees in the manufacturing and production divisions.
The above totals 795 employees laid off.
The restructuring is expected to generate pre-tax cash expenses of $38 million to $42 million, primarily due to severance pay, with most of the costs occurring in the third quarter of 2024, according to the report. Vishay expects annual cost savings of at least $23 million once the plan is fully implemented, with immediate savings of approximately $9 million and another $12 million starting in the first quarter of 2025.
Vishay President and CEO Joel Smejkal said the restructuring is aimed at improving decision-making processes, enhancing customer focus and increasing cost efficiency. The move is also aimed at optimizing the company's global manufacturing footprint by transitioning to a campus manufacturing structure that can accommodate multiple product lines.
Vishay's second-quarter 2024 financial report shows that its revenue remains stable at $741.2 million. The company's gross profit margin is 22.0%, which is negatively affected by the acquisition of the Newport wafer fab. Vishay expects revenue in the third quarter of 2024 to be between $725 million and $765 million, with a gross profit margin of 21.0%.
In terms of strategic initiatives, Vishay plans to invest $2.6 billion to expand production capacity between 2023 and 2028, with the goal of increasing MOSFET production capacity by 12% in 2025 and semiconductor product capacity by 5.5% in 2024.
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