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Micron announced last week it was cutting its workforce and two days later drops $400M for DRAM fab stake

Amid dropping profits and layoffs announced late last week, Micron announced Sunday that it would be buying a $400 million stake in DRAM maker Inotera Memories. Inotera began as a joint venture with Qimonda and Nanya Technology.

The $400 million price tag buys Micron the Qimonda share of the joint venture. CNET News reports that the purchase by Micron will be made in two stages. The first stage has Micron putting up $200 million in cash within the next week which will get Micron 18% of Qimonda's stake in Inotera.

Upon final regulatory approval from the Taiwan Federal Trade Commission, the remaining 18% of Qimonda's stake will be purchased for another $200 million as a part of the second stage. Both stages of the buyout must meet governmental approvals and other conditions.

With Micron announcing last week that it was cutting 15% of its workforce and closing one of its NAND fabrication facilities, it seems an odd time to be buying a stake in an DRAM making firm. The closure of Micron's Boise fab reduced its NAND production by 35,000 wafers per month.

Micron Chairman and CEO Steve Appleton said in a statement, "Micron will gain greater scale in DRAM, reduce our operating expenses per wafer and have access to a very cost competitive operation."

Inotera operates a pair of 300mm wafer fab facilities that produce a combined total of 120,000 wafers per month. To fund the purchase, Micron took a term loan worth $285 million at what it calls favorable terms.



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products
By Oregonian2 on 10/13/2008 2:19:51 PM , Rating: 4
These two events aren't strongly related other than it being the same company. The layoffs have to do with the NAND Flash business being in bad shape while the other event is DRAM business dealings. The DRAM opportunity also is something that's been brewing for quite some time from news reports as well as being an opportunistic sort of thing where they can't put it off and just do it later when finances are better, it's more likely "now or never" -- and it's from the perspective of their very large (to Micron) DRAM business.

If they didn't enter this DRAM deal, the layoffs would still have happened.




RE: products
By PandaBear on 10/14/2008 12:21:27 AM , Rating: 2
Agree, it is suicidal to make NAND or DRAM on 200mm wafer nowadays. 300mm is all automated with "clean room" on each equipment and human is only needed for maintanence. 200mm needs manual labor to operate each machines (thus labor cost and contamination) and you can see how much more expensive it is.

The only surviving DRAM/NAND manufactures are already 100% 300mm, and 200mm fabs are all selling products below production costs.

Micron is taking advantage of Qimonda and buy the JV for a fraction (1/5) of the cost to build a new one. If you are given a house for 40% of the original price, you would have bought it too right?


Now we know where the money went
By Bateluer on 10/13/2008 12:43:26 PM , Rating: 2
Fire 15% of their work force, spend the money on a new acquisition.




RE: Now we know where the money went
By menting on 10/13/2008 3:47:18 PM , Rating: 3
or in other words,
de-emphasize 200mm MLC NAND, and focus on 300mm DRAM


No Fab Shutdown
By FubarB on 10/13/2008 1:04:58 PM , Rating: 2
This is the second time DT has gotten the story incorrect. Micron is not closing a fab, they are stopping production of a part. The Boise fabs will still be online and producing semiconductors, just not NAND wafers.

Please reread the announcements and corrent the stories.




Id be a bit upset
By BB33 on 10/13/2008 1:49:10 PM , Rating: 2
If I had just been informed that im losing my job and then find out that the firm that is firing me is spending a large amount of cash like this, hope they are not letting anyone go that is on the egde.




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