Bleak week for memory chipmakers

Companies that make memory chips faced bankruptcy, layoffs, and rough prospects. Included in the mix: Micron, Spansion, Qimonda, and Intel.

Memory chipmakers, the hardest-hit of the silicon suppliers, this week faced bankruptcy, layoffs, and bleak prospects.

Micron Technology kicked things off by announcing that it would cut as many as 2,000 jobs. Micron and other memory chip manufacturers are all singing the same sad song: slumping revenues amid a steep downward price spiral.

The largest U.S. maker of memory chips said decreased demand for specialty DRAM products had "created additional challenges" for its Boise, Idaho, manufacturing operations. As a result, Micron said it will phase out 200-millimeter wafer manufacturing operations at the company's Boise facility.

The same day, flash memory chipmaker Spansion, previously a joint venture of Advanced Micro Devices and Fujitsu, announced layoffs totaling approximately 3,000, or 35 percent of the company's total workforce.

Spansion's CEO, John Kispert, said the Sunnyvale, Calif., company has been forced to "bring our costs in line with the current expectations for significantly reduced revenues."

Kispert also mentioned that he is positioning the company for a "restructuring and/or sale." The company expects the reduction in workforce to provide it with annual cash cost savings of approximately $225 million.

But this wasn't the worst of it. Qimonda, an affiliate of Germany-based Infineon Technologies, said on the same day that it was seeking bankruptcy protection under Chapter 11 for its U.S. unit. In January, Qimonda filed for insolvency protection in Germany after it was not able to secure government financing.

Intel topped off the bad news on Wednesday by disclosing that it was considering getting out of the flash memory-manufacturing business. Intel CEO Paul Otellini made this statement at a Goldman Sachs investor's conference: "It may not be essential for us to have our own NAND factories to build (flash memory). We could probably specify the product that we want and buy it from third parties," he said.

Is there any upside to all this bad news? Maybe.

"A lot of the end-market conditions for all electronics are awful, but we know all this already, and to a certain extent, that is looking backward," said Avi Cohen, managing partner of Avian Securities, which tracks the memory chip market. "Several component (suppliers) and semi(conductor) guys have echoed the fact that February is not getting worse, which is a nice improvement."

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