Photronics shuts down Shanghai plant

SAN JOSE, USA: In a move that is seen as an effort aimed at reducing costs, Photronics Inc will down shutters at its photomask manufacturing facility in Shanghai. The company's China facility is seen by the company as very small.

According to the company, China's photomask market remains relatively small and it does not foresee a viable path to profitability within an acceptable timeframe. The company has added that to retain cost competitiveness, it needs to align its manufacturing capacity with end-market demand.

The company estimates that 75 employees will be affected by the closure. Photronics, in the meanwhile, has said it is optimistic that it will be able to continue growing its business within Asia.

However, the Shanghai plant closure comes close on the heels of the realization that the integrated circuit mask market in China is not materializing as it had expected.

It may be recalled that the company had recently reached an agreement with Micron Technology Inc. to enter into a new operating lease agreement for its NanoFab mask venture in its bid to cut costs.

Photronics expects to record an after tax charge of approximately $14 million in fiscal 2009. Due to the ability to service customers from other Photronics' locations, the company expects minimal, if any revenue impact, a report said.

Sales for the second quarter were $83.2 million, down 24.6 per cent compared to $110.3 million for the second quarter of fiscal year 2008.

Net loss for the second quarter of fiscal year 2009 was $10.1 million, compared with a net loss of $2.1 million for the second quarter of fiscal 2008. Photronics will now have nine global manufacturing facilities with four located within Asia.