American Semiconductor Company Vishay Implements Restructuring Actions

On September 24, Vishay Intertechnology Inc., a world-renowned American leader in discrete semiconductors and passive electronic components, officially announced a reorganization plan based on its deep industry accumulation and nearly sixty years of glorious history. The core goals of this plan focus on “optimizing the company’s global manufacturing footprint” and “simplifying complex business decision-making processes”, aiming to further strengthen Vishay’s competitiveness in a rapidly changing market environment through strategic structural adjustments and resource allocation.

Speaking of Vishay, in the field of electronic engineering and technology, it has almost become synonymous with high-quality electronic components, and is deeply imprinted in the hearts of countless electronic engineers. From basic rectifiers, MOS tubes, diodes, to highly integrated circuit modules, to indispensable components such as resistors and capacitors, Vishay’s product line covers a wide range, and its presence can be found in almost every core part of every electronic device. These components are not only the basis for the stable operation of electronic equipment, but also an important force to promote scientific and technological progress and innovation.

Driven by the wave of globalization, the supply chain structure of the semiconductor industry has become increasingly complex, involving multiple countries and regions. Although this extensive connection has promoted market expansion, it has also caused the problem of rising operating costs, which is specifically reflected in the fact that raw material prices are increasingly affected by global market fluctuations and the cost pressure caused by differences in labor costs in various regions. In addition, the complexity of the supply chain also brings the hidden danger of instability, which poses a challenge to the sound operation of enterprises. In order to meet these challenges and maintain its competitive advantage in the industry, Vishay has taken a proactive strategy to optimize its operating structure by implementing a restructuring plan. This move is not only a positive response to the current market environment, but also a profound layout for future development strategies.

It is reported that Vishay’s restructuring plan will carry out comprehensive and in-depth actions around the three core aspects of factory closures, layoffs and production structure adjustments, aiming to achieve significant improvement in operating efficiency and optimization of cost structure through precise policy implementation.

First of all, Vishay plans to close three manufacturing plants. Among them, the back-end factory of the diode department in Shanghai, China is expected to be closed by the end of 2026, and the production transfer work will be carried out in stages from the fourth quarter of 2025 to ensure smooth completion. In addition, two small factories in the resistor division in Fichtelberg, Germany and Milwaukee, Wisconsin are also expected to close in 2026. As a result of these factory closures, Vishay will cut approximately 365 direct employees, which is approximately 2% of its total manufacturing workforce.

Layoffs are another key action in the restructuring plan. Vishay is planning to adjust its staff in sales and general administration by the fourth quarter of 2025, which is expected to reduce approximately 170 positions, which is approximately 6% of the total number of related employees. The core goal of this strategy is to simplify the management structure, accelerate the decision-making process, and effectively reduce non-core expenses. In addition, profound changes in manufacturing operations and the re-layout of production lines will affect approximately 260 employees, involving severance payments. Although the specific locations of layoffs have not yet been disclosed in detail by the company, this move is undoubtedly aimed at deepening the optimization of production processes in order to achieve higher production efficiency and cost-effectiveness.

In addition, in terms of financial performance, Vishay Technology’s second quarter 2024 financial report shows that its revenue remains stable, reaching $741.2 million. Although the acquisition of the Newport wafer fab has had a certain degree of negative impact on gross profit margin, Vishay Technology still maintains a gross profit margin of 22.0%. Looking ahead, the company is optimistic about the performance in the third quarter of 2024, and expects revenue to be between $725 million and $765 million, while the gross profit margin is expected to be 21.0%.

In terms of strategic investment layout, Vishay Technology announced an ambitious plan to set a total investment of $2.6 billion in the five years from 2023 to 2028, aiming to consolidate its market position by expanding production capacity. Specifically, the company aims to increase the production capacity of MOSFET (metal oxide semiconductor field effect transistor) by 12% by 2025, and achieve a 5.5% increase in the overall production capacity of semiconductor products by 2024.

After implementing the above plan, Vishay expects to face a pre-tax cash expense of between $38 million and $42 million, mainly due to severance costs, and most of it will be concentrated in the third quarter of 2024. Looking ahead, if the plan can be fully implemented by the end of 2026, Vishay expects to achieve at least $23 million in cost savings per year, of which approximately $12 million is expected to be directly reflected in the reduction of sales, general and administrative expenses. In addition, the company also expects to achieve an annualized cost savings of approximately $9 million immediately. Starting in the first quarter of 2025, Vishay expects to save an additional approximately $12 million per year.

However, it is worth noting that Vishay clearly stated in its official statement that the current estimates of costs and expected annual savings related to the cost reduction plan are based on the best information currently available to it. These figures are preliminary estimates and may change as the plan is gradually implemented and the implementation details are adjusted. Therefore, investors and stakeholders should continue to pay attention to the company’s subsequent updates.

Vishay Intertechnology’s restructuring plan not only focuses on short-term cost optimization, but also looks at long-term strategic development. Joel Smejkal, president and CEO of the company, pointed out that the core goal of this restructuring is to accelerate the realization of the company’s five-year growth strategy by optimizing the global manufacturing layout and eliminating obstacles in the execution process. By transforming to a campus manufacturing structure that can accommodate diversified product lines, Vishay aims to further improve production efficiency and cost-effectiveness.

In short, the official announcement of the restructuring of the US semiconductor company Vishay is an important strategic adjustment in the current market environment. Although this series of actions may be accompanied by challenges and cost burdens in the short term, from a long-term perspective, this will help the company focus more on highly competitive product lines, optimize the global manufacturing network layout, and lay a more solid foundation for its long-term development in the future. Therefore, we should remain optimistic about Vishay’s restructuring strategy and look forward to its better development in the semiconductor industry.