Fairchild Semiconductor Announces Phase Two Growth Plan
4 April 2000
Fairchild Semiconductor Announces Phase Two Growth Plan; Company Targets 10% Market Share In Its Segments
SOUTH PORTLAND, Maine--April 4, 2000--Fairchild Semiconductor International today announced its Phase II growth strategy, designed to attain a 10% market share in its segments and double the company's revenues by 2002. The Phase II plan calls for three initiatives: targeted R&D to accelerate new product introductions, capital investment to increase capacity at the company's manufacturing sites worldwide, and strategic acquisitions to broaden the company's multi-market portfolio."We successfully doubled our company's revenues in just under three years," says Kirk Pond, president, chairman and CEO of Fairchild. "We now are executing on the second phase of our growth plan, which emphasizes initiatives in the fastest growing segments of our industry, particularly power and interface devices and advanced packaging. These products are key components in communication appliances including wireless applications, Internet hardware and digital consumer appliances.
"New product development is the foundation to the financial success and future health of our company. Our commitment to R&D is nearly two to three times what our major competitors spend for these types of products," says Pond. "At our inception, less than 5% of sales revenues were generated from new products. In our recent December quarter, more than 28% of sales were from new products and we expect new product revenues to account for 40% in the near future."
To support accelerating product demand, Phase II capital expansion efforts totaling $255 million in 2000 are underway at the company's five manufacturing sites worldwide. This spending level is more than double expenditures in recent years and includes investments of approximately $70 million in South Portland, Maine; $44 million in West Jordan, Utah; $30 million in Penang, Malaysia; $79 million in Puchon, South Korea; and $32 million in Cebu, Philippines. "We expect greater than $2 in increased annual sales for every $1 we spend on capital improvements," says Pond. "Fairchild has a strong track record of high quality, cost-effective manufacturing, and these investments will drive that performance even higher."
Additional strategic acquisitions comprise the third initiative in the Phase II growth plan. Pond says Fairchild is actively reviewing potential acquisitions capable of meeting the company's criteria. "Any acquisition Fairchild undertakes must be financially sound and contribute profitably from day one," says Pond. "We're looking at companies that can add strategic products utilized in high growth applications, strengthen our geographic markets and open new end market opportunities. We won't settle for less.
"Fairchild's Phase II plan builds logically and concretely upon the successes we drove in our first three years. It's a clear blueprint, an executable blueprint and a successful blueprint for growth."
Fairchild Semiconductor International (www.fairchildsemi.com) is a global company solely focused on designing, manufacturing and marketing high performance semiconductors for multiple end market uses. Fairchild's multi-market components are used in telecommunications, computer, automotive, consumer and industrial applications. Supplying interface, logic, power, analog, mixed signal and non-volatile memory products, Fairchild is filling the gap in the global supply of value added building block semiconductors. The company is headquartered in South Portland, Maine, USA, with 8,400 employees worldwide. Additional manufacturing facilities are located in Utah, South Korea, Malaysia and the Philippines, with regional sales offices throughout the world.
Special Note on Forward Looking Statements:
This news release includes "forward-looking statements" within the meaning of section 21E of the Securities Exchange Act of 1934. Forward looking statements often, though not always, include words or phrases such as "believe," "expect," "estimate," "intends," and "appears." Forward looking statements that express our beliefs, plans, objectives, or future events or performance may involve estimates, assumptions, risks, and uncertainties. In addition to factors discussed above, many other factors could cause actual results to differ materially from those expressed in the forward looking statements. Among these factors are the following: changes in overall economic conditions; changes in demand for our products; changes in inventories at our customers and distributors; technological and product development risks; availability of manufacturing capacity; availability of raw materials; competitors' actions; loss of key customers; order cancellations or reduced bookings; changes in manufacturing yields or output; significant litigation and the impact on our business due to internal systems or systems of suppliers and other third parties adversely affected by year 2000 problems. Other risk factors are listed in the company's Form 10-K for the year ended 26 December 1999 (see the Risk Factors section of the Business description and the Outlook and Business Risk section of Management's Discussion and Analysis of Financial Condition and Results of Operations).
See related release dated April 4, 2000; Fairchild Semiconductor Again Raises Estimates for 1st Quarter 2000 Sales and Earnings