October 31, 2011 -- ON Semiconductor Corporation (Nasdaq:ONNN) believes that its SANYO Semiconductor division's Thai operations in the Rojana Industrial Park in Ayutthaya, Thailand have been severely damaged by the flood. Another facility in Bang Pa In, previously unaffected, is now flooded. ONNN says none of its employees in Thailand have been endangered by flood waters on-site.

Operations at Rojana remain suspended, and ONNN has not been able to enter the 160000sq.ft. site, which employs 2000 people. The company believes it will be unable to re-start semiconductor probe, assembly and test operations at Rojana indefinitely. The flood damage is likely to exceed On Semi's $50 million of potential insurance proceeds at Rojana.

Production is being moved to other facilities within and outside the global ON Semiconductor manufacturing network. Certain products will be sourced from alternative assembly and test locations beginning in Q4 2011, while more complex production transfers may take multiple quarters to be restored to full production capacity.

The newly flooded Bang Pa In location has had to suspend operations and evacuate. The ONNN equipment is located above the ground floor, but the company is not yet able to assess damage to the 8000sq.ft. location. 150 employees work here.

Rojana Industrial Park produced approximately 10-12% of ON Semiconductor’s total worldwide output as measured by revenues of $905.8 million for the second quarter of 2011. The Thai floods will negatively impact revenues and earnings for a minimum of 3-4 quarters, beginning in Q4 2011: approximately $40 million to $60 million per quarter of lost revenue over this period. The company currently anticipates an impairment charge in Q4 of approximately $50 million to $65 million associated with the assets located at its Rojana Industrial Park facility including inventory, fixed assets and other assets.

The company also expects to incur incremental expenses associated with the flood and restoration of production capabilities. ON Semiconductor plans to describe the financial impact of the flood in further detail during its third quarter 2011 earnings call in the first week of November.

Analysts at IHS believe that the manufacturing disruptions at On Semiconductor and another industry heavyweight in the area, Microsemi, will have minimal impact on the entire semiconductor industry. However, whatever direct impact there may be will be felt mostly in the Japanese market. This is because On Semiconductor has limited alternative sites in which to move the test and assembly of customized packages for customers in Japan, IHS reports.

ONNN has confirmed that there remain no on-site injuries to ON Semiconductor employees in Thailand as a result of the flooding. “Our sympathy and concern goes out to our employees, their families and the people of Thailand who have been impacted from the recent flooding,” said Keith Jackson, ON Semiconductor president and CEO.

ON Semiconductor (Nasdaq: ONNN) makes high-performance silicon solutions for energy efficient electronics. For more information, visit http://www.onsemi.com.

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