US semiconductor manufacturer Coherent is facing the potential closure or sale of its 29,000-square-meter wafer fab in Newton Aycliffe, County Durham, UK.
This follows the loss of a significant order from Apple. Coherent's UK subsidiary recently announced that the plant stopped supplying its "major customer" by the end of the 2023 fiscal year (June 30, 2023), raising concerns about the unit's future viability.
The company is now conducting a strategic review, exploring new technologies, and considering selling the plant. Last time buy notices were issued to other customers.
Apple's order halt sparks uncertainty
Reports from The Telegraph and eeNews Europe indicate that the Newton Aycliffe facility was previously responsible for supplying parts for Apple's iPhone Face ID recognition system. However, due to design changes in the new generation of iPhones expected later in 2024, Apple has halted the orders.
Following Apple's decision, which was communicated a year ago, the plant has already laid off hundreds of employees. The remaining 257 employees are retained to fulfill existing contracts.
In 2021, the Newton Aycliffe plant announced a significant expansion, believed to be linked to securing Apple's orders. Financial reports show that since the supply contract took effect, the plant's revenue surged from US$17 million in the previous year to US$134 million in the 2023 fiscal year.
Neither Apple nor Coherent has responded with a comment regarding the potential closure.
A historic fab
The Newton Aycliffe wafer fab has a storied history. It was initially opened as a silicon DRAM wafer fab in 1991 by Fujitsu. The Northern Echo reported the then £40 million factory was opened by Queen Elizabeth II who was welcomed by Fujitsu chairman Takuma Yamamoto and managing director Shino Fujimoto. Local MPs Derek Foster, Tony Blair, and Michael Fallon were also in attendance.
It was subsequently bought by Filtronic in 1999 to manufacture compound semiconductor RF circuits. The facility changed hands through several smaller companies before being acquired by II-VI, which later became Coherent Corp. Coherent operates over 40 sites across the UK and Europe.
The potential closure or sale of the Newton Aycliffe plant marks another significant blow to the UK semiconductor industry. Whether the UK government will intervene in the potential sale remains to be seen.
