by Anton Shilov
10/13/2008 | 09:35 PM
Qimonda AG on Monday announced a global restructuring and cost reduction program. The program is intended to reposition Qimonda in the market and increase its efficiencies through a wide-ranging realignment of its business. As a part of this program, Qimonda has reached an agreement with Micron Technology to sell its 35.6% stake in Inotera Memories, its joint venture with Nanya Technology Corp., to Micron.
"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, chief executive officer of Qimonda AG.
Under the terms of the agreement, Micron has agreed to purchase Qimonda’s shares in Inotera for $400 million in cash (€296 million) in two instalments. Qimonda will receive $200 million for about one-half its holding in about one week, by which time Qimonda expects receipt of the governmental approvals and satisfaction of the other customary closing conditions necessary for this step, and the remaining $200 million for the second half once the remainder of the conditions to the final closing of the transaction have been satisfied. According to the agreement, Qimonda’s share of Inotera’s capacity will be ramped down over the eight months following the closing. Qimonda expects to record a one time book loss on its investment in Inotera of approximately €300 million as a result of the transaction.
Qimonda intends to focus on its core competencies in technology and product development by concentrating on infrastructure and graphics products on the basis of its new buried wordline technology in 300mm manufacturing facilities.
Consequently the following major structural measures will be implemented:
In addition to these structural measures, the company will reduce its R&D and administrative expenses and its headcount, mainly in Munich, Dresden and Raleigh, to reflect the focused product portfolio and reduced production capacities.
These moves will affect approximately 3,000 employees globally. Qimonda expects the restructuring program to result in approximately €450 million of annualized cost savings once it has been fully implemented. Management expects to have implemented the changes by the end of the third quarter of its financial year 2009.