Micron Technology Inc, the world's second-largest maker of computer-memory chips behind Samsung Electronics Co, will cut about 10 percent of its jobs, or close to 1,870 employees, as sales slump and prices fall.
The majority of jobs will be lost in the next seven days.
Some of the workers may be rehired if business improves, spokesman David Parker said. The company didn't provide details on expected cost savings and expenses related to the job cuts.
The cuts come as rivals such as Samsung Electronics expect an oversupply of memory chips in the first quarter. The spot price of a 256-megabit, 266-megahertz double-data-rate dynamic random-access memory chip stood at US$2.95 on Tuesday, less than half their price at the start of the year. Chipmakers begin losing money when prices fall below US$4, analysts have said.
"The market is pretty tough," said George Wu (
Micron Technology, led by chief executive officer Steve Appleton, has been unprofitable for eight straight quarters on weak demand for personal computers, which account for about 80 percent of memory-chip sales.
The company's share of the memory-chip market for personal computers dropped to 17 percent last year from 19 percent in 2001, while Samsung's share increased to 31 percent from 27 percent, according to market researcher Gartner Inc.
Shares of Boise, Idaho-based Micron fell US$0.03 to US$7.17 in New York Stock Exchange composite trading. Its shares have lost 26 percent of their value this year. They've dropped 81 percent in the past 12 months.
It's the first time since 1985 that Micron Technology has cut jobs, according to a report on the Web site of the Idaho Statesman newspaper. Micron Technology was founded in 1978 in the basement of a dentist's office and funded by investors including a farmer and a rancher, the company's Web site said.
Appleton, who joined as a production operator in 1983, has foregone a cash salary since October 2001 and won't take a cash salary until the company turns profitable, according to the company's proxy statement.
"We have tried to do anything possible other than a layoff to constrain our cost structure," Appleton said in an interview posted on the Idaho Statesman Web site.
"The fact is, the market hasn't improved. We have a war on the horizon. We have tremendous uncertainty in the marketplace at our customer base," he said.
Price declines of memory chips in recent weeks spurred the decision to cut jobs, he said.
Micron Technology will also be eliminating certain product lines, its statement said.
Micron has racked up losses of about US$2.2 billion since the second fiscal quarter of 2001, according to Bloomberg data.
Micron had 18,700 employees as of Aug. 29, according to its annual report. It employs 2,900 in Asia Pacific, 1,900 in Europe and 1,000 in Japan, its annual report said.
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