By John O’Connell

joconnell@journalnet.com

    Officials with ON Semiconductor said Thursday they plan to purchase $15.7 million in new production equipment for their local plant, continuing a trend by the Phoenix-based high-tech manufacturer of investing in Pocatello.

    Some of the new equipment should be installed before the year’s end, and all of it should be operational by June of 2011, ON site manager John Spicer said. Spicer estimates the equipment, to be used by ON for making 8-inch wafers, will increase production at the Pocatello plant by 35 percent.

    The capital investment is in addition to plans ON made public in June to purchase an additional $11 million in production equipment. That previous investment doubled ON’s local production capabilities, Spicer said.

    To provide the necessary manpower to run the new equipment, Spicer said ON intends to start hiring new workers through the end of this year and during the beginning of next year. He’s uncertain how many new hires will be necessary.

    “We are actually working on that right now. It certainly will add some jobs to the plant. It will secure jobs that are here now,” Spicer said. “We are hiring engineers. We’re hiring technicians. We’re hiring facility engineers, industrial engineers. It’s the whole gamut.”

    ON currently employs 635 workers at its local facility.

    “As a business grows and as the needs arise, the company will put additional capital into the operation here in Pocatello,” Spicer said.

“We’re thrilled about this announcement for this $15.7 million. It certainly marks a continuation of the work we started at the beginning of the year to expand the operation.”

    Spicer said it made sense for ON to expand in Pocatello because the local plant has available space from the recent closing of its Fab 9 line, which produced smaller 5-inch wafers. But Spicer also believes a strong local workforce and a proven track record in Pocatello contributed to the decision.

    Both the $11 million and $15.7 million investments in equipment, coupled with the conversion of some of the old Fab 9 equipment to the 8-inch system, should fill about 17,000 square feet of the 30,000-square-foot area that formerly housed Fab 9, Spicer said.

    Much of the other tools and machines from Fab 9 were converted for 6-inch production and shipped to other ON manufacturing plants.

    “We still have quite a bit of it here moth-balled,” Spicer said.

    The equipment purchases were facilitated by a state law that took effect last January. The law allows county commissions to approve reductions in property taxes on new equipment purchased by companies. The law helped ON with both purchases — the Bannock County Commission approved a 50 percent reduction in taxes on the $15.7 million investment over a five-year period.

    Though ON now continues to expand its Pocatello operations, just two years ago, when ON acquired locally based AMI Semiconductor, the future of the Pocatello plant was very much in doubt. Spicer said everybody at the plant wondered, “What does this mean for the future?”

    “They gave us time to prove to them that we in fact could become a very important part of the operation in ON. I think everybody feels extremely satisfied and excited about the investment here in the plant because it does secure a path into the future,” Spicer said.

    Though the semiconductor market dropped off significantly 18 months ago, Spicer said it’s rebounded this year, thanks in large part to the revival of the automotive industry and a surge in some personal electronics markets, such as cell phones. Market analysts predict semiconductor sales will be up 33 percent for the year, with growth dropping to single digits during the following two years.

    On Wednesday, ON announced record quarterly revenues of approximately $600.7 million, an increase of about 3 percent from the second quarter of this year.

    “We want to continue to grow here,” Spicer said. “I’m hoping we’ll have more announcements in the future as demand increases and technology continues to grow. ... It puts us in a position to do this stuff.”