German semiconductor maker to cut 190 jobs in Cary

Cary, N.C. — Qimonda AG, a semiconductor-chip manufacturer that employs some 300 people at its U.S. headquarters in Cary, is scaling back its global operations and slashing its headcount in the Triangle.

Some 190 people will be let go, a company spokesperson told WRAL.com shortly after a company meeting Monday morning. Qimonda (NYSE: QI) is based in Germany.

Research and development efforts at the Cary operation will be most affected, with that operation being shut down and work transferred to Germany, according to Glen Haley, Qimonda’s director of corporate communications for North America.

“We’re going to be transitioning a number of designs that are in process to our research facility in Dresden, Germany,” Haley said. “We’ll be completing a number of other projects and basically stopping (research) in Cary at that point.” Haley said he expected the “ramp down” of R&D jobs to be complete by January.

The remaining Cary positions will be primarily for corporate and customer support, Haley said.

Some of the layoffs will take effect this week.

Among those losing jobs are a number of designers who recently transferred to Cary from a Qimonda facility earlier this year.

In 2003, Qimonda received a Job Development Investment Grant from the state of North Carolina as part of an incentives package to expand its Cary operation. Qimonda received $979,000 in rebates from the state for 2003, 2004 and 2005, but did not meet job-creation requirements thereafter in order to receive further incentives, Haley said.

“This is really a tough day,” Haley added. “There are people in the Cary development center who have been with us for almost a decade. We started with roughly a dozen and grew close to nearly 200.

“These are folks who have been very dedicated and have created some of the memory products we all use in our PCs, handhelds and consumer devices like video game consoles.”

Workers will receive severance based on years of service as well as outplacement services, Haley noted.

The Germany-based firm said it would reduce headcount in research and development in Germany as well as in Cary as part of widely expected cost-cutting moves by the financially troubled chip-maker.

Qimonda also is selling its stake in another joint venture, Inotera Memories, to Micron Technology for $400 million. Qimonda, which is itself owned by Infineon Technologies AG, had partnered with Nanya Technology for the Inotera venture.

Micron and Qimonda are competitors in the DRAM, or dynamic random access memory, market. Micron is based in Idaho.

Qimonda owned 35.6 percent of Inotera. The company said it would report a one-time loss of some $400 million on the Inotera investment.

Executives said the firm is moving to become "leaner and more focused" because of a severe downturn in the chip industry.

"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," chief executive Kin Wah Loh said in a statement.

"We plan to concentrate our efforts on selected market segments where we can best leverage our innovative technologies," he added. "We will rationalize our manufacturing footprint and streamline our operational and personnel structures."

As part of its cutbacks, Qimonda will shut down one of two manufacturing facilities in Richmond, Va., by January. The closure affects 1,200 of some 3,000 jobs in Richmond. Another manufacturing plant in Dresden also will be closed. The company said the plans call for some 1,500 jobs to go in Germany and 1,500 in the United States. Qimonda said it had a total of 12,200 employees in September.

Qimonda said it expects to take restructuring charges of some $67 million in the next quarter. It said the program should result in annual cost savings of about $604 million once implemented.

Also on Monday, Qimonda said its chief financial officer, Michael Majerus, is stepping down. It said chief operating officer Thomas Seifert will take on his job on an interim basis.

Qimonda said Majerus' resignation "comes at his own wish for personal reasons."

Qimonda shares were up 21.6 percent in Frankfurt, trading at $1.21.