Qimonda AG dynamic random access memory maker from Germany has filed an application with the local court in Munich today to open insolvency proceedings. Their goal is to reorganize the companies as part of the ongoing restructuring program. The court has appointed a preliminary insolvency administrator.
“German insolvency law offers the opportunity to accelerate the restructuring process that has already been started in order to reposition the company back onto a solid base. Qimonda possesses established products and, with its Buried Wordline technology, is currently bringing a promising future technology to the market,” said Kin Wah Loh, president and chief executive officer of Qimonda AG.
Qimonda already introduced a global restructuring and cost reduction program in October in order to reposition the company. The main focus of the program is to concentrate on core competencies, such as the innovative Buried Wordline technology, as well as the company’s strong portfolio of infrastructure and graphics products.
The insolvency petition is the result of the massive drop in prices in the DRAM industry and dramatically decreased access to financing on the capital markets, both of which have led to the deterioration of the financial position of Qimonda in recent months. A financing package involving the Free State of Saxony, parent company Infineon, a leading Portuguese financial institution and additional banks could not be completed in time, despite intensive but also very complex negotiations and financial support committed by customers over the past days and weeks. Furthermore, an increased need for financing for the current financial year recently became apparent as a consequence of the price decline in the December quarter and the fact that important investments needed for productivity improvements could not be made due to the delay in negotiations.
The temporary insolvency administrator will analyze the situation at Qimonda in the coming days.
“It is still too early to make a well-founded assessment. What is already clear is that we are dealing with a highly complex situation and an extremely capital-intensive business. Therefore, contributions from financially strong investors are required to reach a sustainable solution,” said preliminary insolvency administrator Dr. Michael Jaffé.