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Qimonda slashes 3,000 jobs, exits 200-mm production, CFO resigns
Jobs will be cut as the struggling DRAM maker attempts to reposition itself by selling off investments and exiting 200-mm manufacturing, ramping down manufacturing in Virginia and in Germany.
By Suzanne Deffree, Managing Editor, News -- Electronic News, 10/13/2008
Qimonda AG today announced a global restructuring and cost reduction program that will see the company cut 3,000 jobs as it reworks its manufacturing and attempts to reposition itself in the harsh memory industry.
In doing so, the company will reduce its R&D and administrative expenses and its headcount, mainly in its Munich and Dresden, Germany, and Raleigh, NC, locations.
"Qimonda has been engaged in an ongoing review of its business over the last several months. The severity of the current downturn in the DRAM industry and its consequences for our financial situation has led us to redefine our operating model. As such, Qimonda is executing a strategic plan to transform the company, becoming leaner and more focused," said Kin Wah Loh (pictured), CEO of Qimonda, in a statement.
The DRAM industry's issues are not a matter of weak demand, but of oversupply, which has driven down ASPs (average selling prices). Indeed, iSuppli recently lowered its DRAM revenue forecast for 2008, as well as its total semiconductor revenue growth forecast for the year to just 3.5%.
Qimonda's restructuring efforts come one day after Micron Technology announced it would buy the company's stake in Inotera Memories for $400 million. At the price, Qimonda will accept a $408 million loss on its investment in the DRAM joint venture, which it started as part of Infineon Technologies AG with Nanya Technology in 2002.
"The sale of our stake in Inotera is a key step in Qimonda’s restructuring, helping to give us a cash influx and sharpening our focus," Loh said. "Going forward, we plan to concentrate our efforts on selected market segments where we can best leverage our innovative technologies. We will rationalize our manufacturing footprint and streamline our operational and personnel structures. We expect these measures to improve our competitive position and to provide additional strategic opportunities for our company."
Specifically, Qimonda said it intends to concentrate on infrastructure and graphics products on the basis of its new buried wordline technology in 300-mm manufacturing facilities.
As such, Qimonda said it will ramp down manufacturing at its 200-mm facility in Richmond, Va, by January 2009, completing the company's exit from 200-mm production. Further, Qimonda's backend component and module manufacturing in Dresden, Germany, is planned to be shut down by end of March 2009.
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Qimonda said that it continues to seek financial or strategic partnerships that can assist it in its restructuring process. Warning that it may or may not be successful in those efforts, the company noted that the process may also be supported by the ongoing efforts of Infineon, if successful, to dispose of its stake in Qimonda. Infineon, which spun out it DRAM operations to form Qimonda in 2006, currently owns approximately 77.5% of the company's shares and began to reduce its stake in September 2007.
The restructuring changes also come as Qimonda's CFO, Michael Majerus, announced his resignation today. According to a short statement from Qimonda, Majerus is leaving the Munich, Germany-based company on his own accord and for personal reasons.
