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Qimonda AG has begun a major restructuring of its operations and market focus announcing fab closures, layoffs, the exit from the commodity side of the PC-based DRAM market and the sale of its stake in DRAM memory producer Inotera Memories to Micron Technology for $400 million. In related news, Qimonda’s CFO has resigned and Infineon, the majority shareholder in Qimonda, has said that it is in discussion with several third parties to sell its 77.5 percent shareholding in Qimonda.

"Qimonda has been engaged in an ongoing review of its business over the last several months. The severity of the current downturn in the DRAM industry and its consequences for our financial situation has led us to redefine our operating model. As such, Qimonda is executing a strategic plan to transform the company, becoming leaner and more focused," said Kin Wah Loh, Chief Executive Officer of Qimonda AG. "The sale of our stake in Inotera is a key step in Qimonda’s restructuring, helping to give us a cash influx and sharpening our focus. Going forward, we plan to concentrate our efforts on selected market segments where we can best leverage our innovative technologies. We will rationalize our manufacturing footprint and streamline our operational and personnel structures. We expect these measures to improve our competitive position and to provide additional strategic opportunities for our company."

In what is being seen as a significant move to limit significant financial losses, Qimonda said that it would now concentrate its business on developing its markets in more specialized DRAM sectors of infrastructure and graphics based on its next-generation buried wordline process technology at its 300mm fabrication facilities. This would infer that it would exit the commodity PC memory market over time.

In support of this strategy, Qimonda has sold its 35.6 percent stake in Inotera Memories, its joint venture with Nanya Technology Corporation, to Micron Technology for $400 million. Qimonda expects to record a one time book loss on the sale of approximately €300 million. Inotera is a commodity DRAM memory producer based in Taiwan. Qimonda’s share of DRAM production at Inotera will be phased out over the next eight months the company has said.

Qimonda will also close its 200mm fab in Richmond, Virginia, by January 2009, eliminating all 200mm fab operations. The company is also closing its backend component and module manufacturing in Dresden, Germany, which is expected to be completed by the end of March 2009.

The company will reduce its R&D and administrative expenses with the loss of approximately 3,000 jobs, mainly in Munich, Dresden and Raleigh, USA. Qimonda expects the initial restructuring to cost €50 million, but after negotiations with the workers' councils, expects further charges to be made.

The restructuring is said to produce annualized cost savings of approximately €450 million.

The DRAM market has been in a crisis as overcapacity has been compounded by weakening consumer demand as the credit crunch takes hold. The majority of memory manufacturers have been loss-making for nearly two years.