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When the Stars Align

Article by James Gardner, originally published in The Podium, Fall 2015 ed.

When you enter into an auction project, you never know which direction it’s going to turn or how you are going to get there. In the winter of 2015, The Branford Group received a request for qualifications from Fairchild Semiconductor indicating that they were closing their 500,000 square foot, 6” wafer fabrication facility in West Jordan, Utah. Headquartered in San Jose, California, Fairchild is a global supplier of power semiconductors also producing controllers, signal processors, integrated circuits, transistors and other technology solutions across various industries. The company employs approximately 9,000 employees worldwide and enjoys a strong history as being a pioneer in the semiconductor industry.

The Branford Group provided a strong proposal and was awarded the project to handle the overall disposition of the equipment. The scope was to manage the disposition over a six-month period of time; completing certain phases of the project, while Fairchild wound down their operations.

As part of the RFQ process, Fairchild requested an incredibly quick turn-around time to organize, clean, create a lot catalog, and market the multi-million dollar offering. The completion of the setup portion all had to occur while Fairchild was running production in a 300,000 square foot Class 10,000 cleanroom. For those unfamiliar with a Class 10,000 cleanroom, this meant complete gowning from head to toe in full bunny suits for all of our operations staff. Having to work in a cleanroom can be tight quarters to begin with, doing this in full cleanroom suits, while writing up and photographing equipment presents a whole new challenge. Couple the cleanroom logistics with working around the needs and demands of Fairchild’s rigorous production deadline and it became quite a task to accomplish our ultimate goal.

Phase I of the project required our operations staff to identify and create a lot catalog of all of the Core Assets (6” wafer equipment slated for disposition). At the same time, our marketing team went out to a global audience to attract potential bulk buyers and those interested in large packages of assets. We were able to identify several overseas buyers that wanted to tour the facility and place bids on either the entire listing of assets or key packages of assets in the offering. After providing tours of the plant, we were able to negotiate with a Chinese buyer for the sale of the entire Phase I listing of Core Assets in bulk under financial terms that made each of the groups very excited about the transaction. Working with one buyer to complete Phase I of the project allowed us to work with one rigging company to properly handle all of the disconnects, decontamination, and decommissioning without compromising the integrity of the equipment. Even though the payment for Phase I occurred in July of 2015, it took several months to move, store, and rig the Core Assets from the facility.

As many in our industry would acknowledge, a project of this magnitude does not take place without a few obstacles in the process. As part of exporting equipment to China, certain export documentation needed to be completed, including documenting all of equipment with the correct Schedule B Numbers and ECCN Codes. Another layer that exists in selling to a Chinese buyer is the requirement of a CCIC (China Certification and Inspection Group) inspection and report. This means allowing a CCIC inspector to examine the assets being exported for safety, health, and environmental protection. Because our operations team was able to maneuver their way through these and other logistics hurdles that came up, they delivered positive results for Fairchild, the Buyer, and our team.

Phase II of the project was identifying, selling and marketing all of the remaining fab support equipment, including all of the spare parts that went along with the 6“ wafer Core Assets. Our Chinese buyer from Phase I was extremely interested in all of the spare parts and the majority of the support equipment as they were building a completely new facility in China and would require such assets. Consequently, we were able to negotiate a strong recovery on Phase II from this same buyer again making it much easier on the delivery and loading end.

As the project winds down with Fairchild, we will be completing Phase III in Q4 of 2015 – the final cleanup sale, which includes facility support, fab support and maintenance. The likelihood of finding the right buyer at the exact time is usually quite rare for many of us in the auction business. When the stars align and that buyer emerges, it can make for a very successful project.
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