Labour representatives have walked out of a meeting where STMicroelectronics informed them of its plans to migrate at least half of its European and US 150mm wafer production either to finer geometry 200mm wafer fabs or to the company's 150mm fab in Singapore.

Labour representatives have walked out of a meeting where STMicroelectronics informed them of its plans to migrate at least half of its European and US 150mm wafer production either to finer geometry 200mm wafer fabs or to the company's 150mm fab in Singapore.

In particular, the company will withdraw from its 150mm fab in Rennes, France. Some 150mm activity will be transferred to ST's 200mm fab at Rousset near Aix en Provence. The company's specialised discrete-components activity at Tours will continue.

The Rennes site employs 428 people under permanent contract. Some 34 of these employees are scheduled to take early retirement. The facility is ST's smallest 150mm production unit. The company says that its location within the city of Rennes prevents the site from expanding to accommodate 200mm or 300mm technology.

In November 2001, a committee was set up to identify potential new activities for the site. The committee examined a project to convert the site to new technologies, such as MEMS (micro-electro-mechanical systems), or to establish research and development activities. However, the MEMS market is highly competitive, represents limited volumes and accounts for only about 1% of the global semiconductor market. R&D activities alone would not be enough to sustain the site.

ST's management then initiated efforts to attract other companies to the Rennes site with the aim of maintaining industrial activity there. These efforts will continue. In the meantime, production will be run down at the Rennes site, before stopping completely at the end of March 2004. The activity of assembling and testing components for the space industry, which cannot continue alone at the Rennes site, will be transferred to another ST site in Europe.

As a result of the walk out, the company has sent the plan to each representative by mail.

The company says that rapid changes - characterised by replacement of mature 150mm technology - has prompted the need for the plan. The older 150mm production has become increasingly exposed to competition. Newer facilities use 200mm and 300mm wafers. Further, many of ST's customers have shifted production to Asia.

ST says it will offer jobs at its other sites in France to all Rennes employees, at equivalent professional conditions. Currently ST has 384 permanent positions that need to be filled in France. The transfers would be accompanied by an incentive package including relocation and training. ST is also willing to help workers find jobs outside the company. In addition, early retirement programmes are foreseen.

Tours is not considered to be subject to the same 150mm wafer competitive circumstances as Rennes. The Rousset site is ST's main location for providing integrated circuits for microcontroller-based smartcards.

The current inventory of ST fabs in France is single 150mm fabs located at Rennes and Tours, 150mm and 200mm fabs at Rousset and 200mm and 300mm fabs at Crolles, near Grenoble. The 300mm Crolles2 facility is a partnership with Motorola and Philips.

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