Qimonda to Shut Down U.S. Plant as European Union Rules Out Bailout of Chip Maker

Qimonda Shuts Down Fab as EU Denies Bailout

by Anton Shilov
02/03/2009 | 02:01 PM

Qimonda AG, a struggling maker of dynamic random access memory (DRAM), said it would should down Qimonda memory plant in Richmond, Virginia without paying severance to employees. Meanwhile, an official for the European Union said he saw no reasons in helping Qimonda, which raises questions whether the company can continue production in Europe.

 

“The company has made the decision to ramp down all production in Qimonda Richmond. Currently, we are completing wafer testing but do not expect to continue manufacturing beyond that. During the ramp down process, tools and equipment will be brought to a “safe” state and idled. This action will affect all employees at the facility. The shut down will be extremely fast. We expect about 500 people to leave the company today and tomorrow, and another 500 will leave over the next 30 days. Once we reach an idle state at the end of April, we expect to have only 50-60 people remain as a skeleton crew,” said Miriam Martinez, president and chief financial officer of Qimonda North America, in an internal memo published by Barron’s online.

Mr. Martinez added that Qimonda was not in position to pay compensations to employees and did not outline any plans to save jobs.

Separately, European authorities do not seem to want to help Qimonda to get through the tough times.

“Nobody can save a company whose owner does not want to save it. If a company no longer believes in a location, then the die is cast in a free market economy,” said European Union Industry Commissioner Guenter Verheugen in an interview with Saechsische Zeitung news-paper published in Dresden, Germany, reports Reuters news-agency.

Mr. Verheugen implied that even Infineon, which controls Qimonda, did not provide its help in time to the struggling DRAM manufacturer and added that public subsidies must not be spent in order to bail out companies.

The claim raises questions whether Qimonda, which proclaimed itself insolvent, will be able to continue manufacturing memory in its plants in Germany and Portugal without cash.