Qimonda has been forced to cut capital spending and halt the construction of its 300mm fab in Singapore in an effort to conserve cash as losses widened to $866 million in its first quarter financial results.
Executives said in a conference call with financial analysts that the
construction of the fab in Singapore would not be resumed until the
DRAM pricing environment improved coupled to a further reduction in
DRAM supply that demonstrated itself as a ‘sustainable trend.’
Qimonda has also revised 2008 capital spending plans downwards twice in the quarter. CapEx is now being put at between $582 million and $728 million for the year. The majority of the spending will be focused on ramping to full capacity its 300mm fab in Virginia, USA with the goal of reaching 7,000 wafer starts per week.
CapEx will also be allocated to a technology migration from 80nm to the 58nm node in the second half of 2008 at both Virginia and Dresden 300mm fabs. The shift to the 58nm node is expected to realise cost savings of 60 percent compared to previous nodes.
Further cost savings are expected in reducing its dependence on its JV and foundry partners that include Inotera Memories, Nanya Technology and SMIC, which supplied slightly more than 50 percent of Qimonda’s DRAM requirements in 2007. However, executives said that the review was ongoing and declined to give specific details of the possible supply reduction.
With the previously announced reduction in 200mm wafer production at 200mm fabs in Virginia and Dresden (under contract with Infineon), the company has now ended its 200mm supply contract with SMIC.
With the push to full capacity at its 300mm fab in Virginia, Qimonda expects wafer-outs in 2008 to slightly exceed 2007 levels. However, the company has reduced its forecast for DRAM bit growth in 2008 from a previous target of 50 percent to between 30 and 40 percent.
Qimonda executives noted that its equipment lease-back strategy had continued in the quarter and that it was further reviewing the strategy as it still had approximately $3 billion in equipment for potential lease-back.