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February 28, 2022

South Portland semiconductor plant is being sold to Texas manufacturer

gray, industrial plant with ON sign, viewed from across a street File Photo / William Hall This South Portland semiconductor manufacturing site is being sold to Diodes Inc., of Plano, Texas.

A semiconductor factory in South Portland that laid off workers a year ago is now being sold.

Phoenix-based onsemi (Nasdaq: ON) on Monday announced it has signed an agreement to sell the 371,000-square-foot plant to Diodes Inc. (Nasdaq: DIOD), of Plano, Texas, for an undisclosed price.

The sale is expected to close in the second quarter this year, according to news releases from both onsemi, formerly ON Semiconductor Corp., and Diodes.

Following the sale, Diodes “will integrate the South Portland facility as well as its operations and employees,” the company stated. Diodes spokesman Gurmeet Dhaliwal told Mainebiz all workers would be offered employment with the company, and that no relocations are planned.

Last year, onsemi laid off roughly 740 of its 34,000 employees as part of a streamlining effort. The cuts included some in South Portland, but the company at the time would not say how many. Instead, a representative told Mainebiz the reductions were “minor.”

The company purchased the facility, which makes a range of semiconductor wafers and components at 333 Western Ave., in a 2016, $2.4 billion acquisition of Fairchild Semiconductor International Inc. The plant and offices then employed about 700 people. During the acquisition, some industry analysts suggested that the plant's age — it was built in 1962 — might lead the buyer to close the facility.

With $1.81 billion in 2021 revenue, Diodes is considerably smaller than onsemi, which reported revenue of $6.74 billion last year. But Diodes’ revenue is growing faster, up 46.9% in 2021 compared to onsemi’s 28.3% revenue increase. Diodes has said it's on a path to pushing its gross margin to 40% in 2025, a goal that could create high expectations for the South Portland site.

If the sale is completed, the new site would join 31 other Diodes locations worldwide and expand the company’s capacity to manufacture semiconductor wafers for use in the automotive and industrial markets.

Dhaliwal said the addition of the South Portland plant "aligns well with Diodes’ strategic objective for significant revenue and profit dollar growth. We expect additional 8-inch wafer fab capacity to support growth expectations and increase Diodes’ installed base as [the plant] provides extensive engineering capabilities to support current and next-generation products."

Keh-Shew Lu, chairman, president and CEO of Diodes, added in the news release, “The team’s exceptional engineering capabilities and skills will support our technical and operational performance expectations and are a welcomed addition to the Diodes’ family.”

For onsemi, the transaction plans follow the sell-off earlier this month of a similar plant in Belgium.

Hassane El-Khoury, president and chief executive officer of onsemi, said, “The transactions provide employees at the affected fabs with continued employment and growth opportunities while allowing onsemi to transition production from these fabs to other manufacturing sites in an orderly manner.”

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