Cypress Semiconductor (NYSE:CY) will close its Fab 2 semiconductor manufacturing facility in Round Rock, Texas by late 2008 and transfer production to its more cost-competitive Minnesota fab and outside foundries.

Executive VP of manufacturing at Cypress Shahin Sharifzadeh said that the company is looking at a number of options that include selling the Texas fab operation or simply divesting its assets. The company says Fab 2 is efficient and well-run operation but the factory is small and runs older 0.35 micron process technologies. All of its newer products are being designed on more advanced process technologies

Cypress opened Fab 2 in 1987 with 68 employees and 18,000 square feet of cleanroom space. The plant was expanded to 32,000 square feet in 1999 and currently employs 245 people. In recent years the site has been building legacy USB, programmable logic, timing and communications devices on six-inch wafers. The plant would be ideally suited for a company that is looking to make custom analog parts or wants a site for U.S.-based products.

Cypress's decision to exit Fab 2 is in support of the company's Flexible Manufacturing initiative, which combines capacity from leading foundries with output from Cypress's internal fabs. The initiative allows Cypress to meet rapid swings in customer demand without the burden of high fixed costs, a capability that is particularly important in high-volume consumer markets that the company serves with its programmable product portfolio.

Contact:
Shahin Sharifzadeh, EVP of manufacturing, Cypress Semiconductor, www.cypress.com