POCATELLO — The future of LA Semiconductor, one of the Gate City’s largest private employers, is in question after a recent lawsuit resulted in the appointment of a permanent receiver to oversee operations at the company’s silicon wafer fabrication plant on Pocatello’s east side.

Former employees this week told the Idaho State Journal the appointed receiver has recently implemented significant layoffs — with at least 40 workers at the plant asked to hand over their keycards.

While the firm now operating the plant under the terms of the receivership has denied any significant layoffs and court documents show there is an effort underway to keep the plant open and going strong, former employees said they have concerns about the plant’s future.

The court-appointed receiver for LA Semiconductor is FTI Consulting, a Washington, D.C.-based company that describes itself as the leading global expert firm for organizations facing crisis and transformation. It was put in place to operate the plant following a February order from a federal judge in Ohio after the plant’s former owner sued LA Semiconductor.

ON Semiconductor, since rebranded as onsemi, sold the Buckskin Road plant to LA Semiconductor in late 2022 for about $32 million, expecting continued silicon wafer production from the facility for onsemi’s aerospace, defense, medical and automotive applications, court records show.

This past December onsemi sued LA Semiconductor and its founder, President and CEO Mike Ward for contract breaches, including confidentiality violations and misrepresentations to other third parties.

The lawsuit claims LA Semiconductor’s breaches threaten critical component production, harming onsemi and its customers, which include the U.S. Department of Defense.

“Notwithstanding that (LA Semiconductor) has perpetually been in breach of the (contracts) since the transaction closed, onsemi has attempted to work with (LA Semiconductor) to remedy multiple and successive events of default that have occurred … including but not limited to multiple formal and informal offers to repurchase the fab,” the lawsuit states.

Further, the lawsuit alleges that LA Semiconductor is experiencing significant financial issues, that both Ward and the plant’s solvency are in question and that Ward may be directing funds from LA Semiconductor to his other personal business ventures.

Ward responded to the lawsuit in March, largely denying its assertions and provided 13 affirmative defenses. Ward’s response alleged that onsemi is barred from seeking relief because it has engaged in unethical or inequitable behavior itself, that onsemi also breached the contracts with LA Semiconductor, and that onsemi failed to mitigate its damages resulting from its operation of the plant.

The Idaho State Journal attempted to reach Ward but he did not respond to multiple requests for comment for this article.

In order to protect its assets and products associated with its former Pocatello plant, onsemi asked the federal court to appoint FTI Consulting as receiver over LA Semiconductor.

The court agreed.

FTI’s initial temporary receivership started on Dec. 21, 2024, and became permanent on Feb. 19, court records show.

“Receivership is a legal process where a business that is struggling financially or facing other serious issues has a receiver appointed to take control and manage the company,” FTI says on a website, lasreceiver.com, created to address concerns about the receivership. “The receiver is usually a neutral third party, often an expert in business or finance and their job is to help the company stabilize, address its problems and find the best way to resolve its issues. As receiver, our role is to oversee operations, manage assets and ensure the continued stability of (LA Semiconductor) while legal proceedings continue.”

FTI says its primary objective is to “maintain business continuity, fulfill (LA Semiconductor’s) commitments to customers and partners and support employees throughout this process,” adding that “the Pocatello wafer manufacturing plant remains fully operational, and we are committed to ensuring the company continues to deliver high-quality products without disruption.”

FTI Consulting said the rumors of significant layoffs at the plant are inaccurate. When questioned this week about the former employees who told the Journal they were laid off, FTI had no comment.

FTI has maintained a regular presence at the Pocatello plant since December, court records show.

In February when the receivership became permanent, FTI continued to work with the plant’s general manager at the time, Bill Ward, no relation to Mike Ward, to identify and resolve outstanding financial discrepancies, which included engaging with a local accounting firm to conduct a year-end financial statement review, according to court records.

Bill Ward, who was a longtime employee at the plant and became the general manager not long after the transition from onsemi to LA Semiconductor, resigned in March. He said up until his March 28 resignation there weren’t any significant layoffs at the plant, adding that his departure was not centered on concerns with the plant’s future.

“I would hate for people to think that I left because I thought the place was burning down,” Bill Ward said. “I left because I got a great opportunity that I wanted to pursue.”

Regarding the plant’s future, he added, “We felt optimistic. The nature and tenor of the (internal) town hall meetings that we held was, ‘We know what we need to do, we’re going to do it, and we have a bright outlook.’”

Bill Ward said that since his resignation he has also heard rumors of significant layoffs at the plant but is unsure if they’re true.

Following Bill Ward’s resignation, FTI hired two co-general managers to oversee operations at the plant, court records show.

Pat Sedlmayer, an employee at the plant, was promoted to one of the co-general manager positions.

Tony Little, an experienced fab operations and quality manager, joined LA Semiconductor as the other co-general manager, court records show.

Sedlmayer mostly focuses on optimizing plant operations, ensuring it produces as much as possible while keeping quality high. Little’s primary tasks include dealing with customers, managing employees and running the day-to-day business operations, according to court records.

When the Journal attempted to reach both Sedlmayer and Little by calling the Pocatello plant, a receptionist said they had no comment and directed all questions to FTI Consulting.

Regarding the layoff rumors, LA Semiconductor has not notified the Idaho Department of Labor of any such workforce reductions, a spokesperson for the state agency told the Journal in a recent email.

FTI Consulting told the Journal the actions it has conducted during the month of May will be detailed in a status report filed in federal court on June 20.

Meanwhile, onsemi’s lawsuit against LA Semiconductor to ensure the plant remains operational is ongoing in federal court.