Just two months after saying more local job cuts weren’t expected, computer chip maker Micron Technology Inc announced it will slash as many as 2,000 workers by the end of August and phase out certain manufacturing operations at its Boise, Idaho, facility, amid the weak economy and lower demand for its dynamic random access memory (DRAM) chips.
The company said late on Monday it would end manufacturing of DRAMs on 200mm wafers in Boise, cutting 500 jobs in the near term. The 200mm wafers are being shelved in favor of 300mm wafer plants, which are more cost-effective.
DRAM has suffered in the last two years from oversupply and pricing pressure on chips used in personal computers and the slumping automobile industry. Micron’s rivals also are hurting. South Korea’s Hynix Semiconductor has posted five consecutive quarterly losses, including nearly US$1 billion in the three months ending Dec. 31, while German memory-chip maker Qimonda AG filed for bankruptcy protection last month.
Hynix has said DRAM prices dropped 43 percent from the third quarter.
Micron’s latest cuts come on top of a 15 percent company-wide layoff announced in October, in which it eliminated about 3,000 of its 19,000 total positions. About 1,500 of those were in Boise, as it shut down the NAND flash memory plant it operated as part of a joint venture with Intel Corp.
Now, Micron would employ just over 5,000 people in the state, down from more than 10,000 two years ago. Once Idaho’s largest private employer, it will trail St Luke’s hospitals and Wal-Mart Stores Inc, which have some 7,500 workers.
The latest action will cost Micron about US$50 million, but is expected to generate annual cash savings of about US$150 million.
Micron plans to keep its 300mm research and development fabrication facility at its site in the desert near Boise, where it does product design and support, quality control and also has corporate and general services offices.
Spokesman Dan Francisco called those vital services for the company.
He said the 200mm wafer manufacturing facilities being shuttered would be kept in a “warm-down state” and could eventually be used for additional, unspecified manufacturing activities. The company doesn’t expects the moves would result in any disruption in product supply to customers.
“We remained hopeful that the demand for these products would stabilize in the marketplace and start to improve as we moved into the spring. 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,” Micron chairman and chief executive Steve Appleton said in a statement.
Addressing shareholders in December, Appleton had said Micron would continue to evaluate staffing levels as dictated by the market, but didn’t foresee more staffing cuts in Boise.