Micron Technology, a leading maker of dynamic random access memory (DRAM) and NAND flash memory, said on Thursday that it would restructure its memory operations. The company plans to reduce workforce by about 15% and will also reduce production of flash memory.
“Operation shutdowns and related workforce reductions are always painful, but we are pursuing these actions to maintain the competitiveness of the company,” said Steve Appleton, Micron chairman and chief executive officer.
The combination of declining customer demand and product oversupply in the marketplace has driven selling prices for NAND flash memory significantly below manufacturing costs, particularly for 200mm manufacturing lines, the company said. As a result, IM Flash Technologies (IMFT), a joint venture between Micron and Intel Corp., will discontinue the supply of NAND flash memory from Micron’s Boise facility. The NAND operation shutdown will reduce IMFT’s NAND flash production by approximately 35 thousand wafers (200mm) per month.
As part of the restructuring, Micron plans to reduce its global workforce by approximately 15% during the next two years. The majority of the workforce reductions, which will begin with a voluntary program, will occur in Boise as a result of the NAND operation shutdown. Micron is committed to assisting employees affected by the workforce reductions and is providing severance and outplacement services.
It is interesting to note that Micron is rumoured to be looking at Qimonda, a DRAM maker that is controlled by Infineon AG. Micron reportedly wants to acquire Qimonda, which would effectively boost its workforce, amid bad situation on the market at a very low cost, but Infineon refuses to sell its DRAM unit.
“Micron is in a strong position relative to our competitors, as evidenced by our balance sheet and cash flow, but we are not immune to the difficult global market conditions that are affecting us all,” Mr. Appleton added.
Cash restructuring and other related expenses are anticipated to be approximately $60 million, and the next year’s cash operating margin benefit is expected to exceed $175 million.