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Micron, Spansion announce layoffs; Micron to shutter 200-mm Boise fab

24 February 2009 | By Tom Cheyney | News > Fab Management

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micron_boiseThe worsening economic crisis continues to wreak havoc in the semiconductor manufacturing sector, as Micron and Spansion became the latest chipmakers to announce employee layoffs and fab shutdowns. Micron said that it will phase out 200-mm DRAM operations at its Boise facility, which will reduce employment by 500 in the near term and up to 2000 by the end of the fiscal year. Spansion announced that it will trim its global workforce by 3000--a 35% cut--with the majority of pink slips coming at its production sites. 

Micron said that it has sufficient manufacturing capacity remaining and does not expect any disruption in product supply required for customer needs.

"We remained hopeful that the demand for these products would stabilize in the marketplace and start to improve as we moved into the spring," commented Steve Appleton, Micron's chairman/CEO. "Unfortunately, a better environment has not materialized, and we are at a point where we wanted to let our employees and the community know in advance what will occur later this summer.

The company will continue to operate its 300-mm R&D fab in Boise and perform a variety of other activities, including reticle manufacturing, product design and support, quality assurance, systems integration and related manufacturing, corporate, and general services.

These workforce changes were not anticipated or included in Micron's earlier 15% global workforce reduction announcement last October. Following these changes, Micron will still employ more than 5000 in Idaho.

Cash restructuring charges will be approximately $50 million, which will generate a gross annualized operating cash benefit of $150 million. The net operating cash flow effect will be neutral for fiscal year 2009, according to the company.

The Spansion move came as part of an effort to further reduce costs as the company restructures and explores various strategic alternatives.

"The global recession is forcing us to make this very difficult decision in order to bring our costs in line with the current expectations for significantly reduced revenues," said John Kispert, who was recently appointed as president/CEO. "This action was not undertaken lightly given its impact on our employees and their families. However, we have a responsibility to preserve the value of the enterprise as we pursue our goal of positioning Spansion for a recovery through a restructuring and/or sale."

The company expects that when complete, this layoff will result in approximately $25 million in cash charges, during the first half of 2009. The company believes the action will provide it with annual cash cost savings of approximately $225 million.

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