Chip manufacturer NXP has announced that it will eventually cease all production activities in Nijmegen, Netherlands. Three factories in the United States will also close their doors.
The decision is part of a broader strategy in which the company is focusing on more efficient production technology in new factories in Singapore and Germany. Although the closure should take place as soon as possible, a transition period of approximately ten years is being considered.
The Nijmegen factory has been a heavyweight in the Dutch chip sector for decades. With 1,700 employees and a history dating back to the Philips era, the site in the east of the country is currently NXP’s largest production facility worldwide. The factory focuses primarily on the production of chips for the automotive industry.
Higher margins
The outdated production technology in Nijmegen played an important role in the decision. The site works with 200-millimeter wafers, which yield significantly fewer chips than the 300-millimeter wafers that will be used in the new factories. According to NXP, the switch to the new standard should lead to lower costs and higher margins. In addition, the new factories have been set up as joint ventures, which allows the company to spread the financial risks more effectively.
In Dresden, NXP is building a factory in partnership with Infineon, Bosch, TSMC, and others, in which it has a ten percent stake. In Singapore, it has a forty percent stake in another, larger factory, for which an investment of $7.9 billion has been set aside. Both facilities are expected to be fully operational by 2027.
Although it is not yet clear when the Nijmegen factory will close, the intention is clear. In the coming years, existing processes will be gradually transferred to the new locations. According to operational director Andy Micallef, the intention is that the older factories will eventually disappear completely.
Unrest in Nijmegen
The announcement has caused quite a stir in Nijmegen, according to the Dutch-language Gelderlander newspaper. Local politicians have expressed their concerns about the impending job losses and the possible loss of a technological pillar in the region. They are calling on the municipality to enter into talks with NXP about the future of the employees and the role that Nijmegen will continue to play in the chip industry.
At the same time, NXP continues to invest heavily in research and innovation. At the beginning of this year, the company was granted a European loan of one billion euros, part of which will go towards development activities in Nijmegen. For the time being, this seems to remain an important role in the knowledge side of the chip process.