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Micron CEO says layoffs difficult but necessary

Posted: 13 Jul 2007 ?? ?Print Version ?Bookmark and Share

Keywords:Micron layoffs? Micron CEO? CMOS image sensor?

After reporting major losses in the last quarter, Steve Appleton, Micron Technology Inc. chairman and CEO, cleared reports about its planned workforce reduction and capital spending cuts.

In a statement, Appleton said, "This is a challenging time for Micron. The global markets that our products are sold into have experienced severe oversupply and price degradation. Micron is pursuing a number of initiatives to drive greater cost efficiencies and revenue growth across our operations. This is a process that we are working through, and it will take time."

In line with their initiatives, the company will reduce workforce in certain areas as it realigns the business. According to Appleton, they have completed many of the reductions, which account for less than 10 percent of the workforce in the Treasure Valley.

He added that the company is helping affected employees with the transition by providing severance and outplacement services. "Workforce reductions are always difficult, but these initiatives are being pursued to support the long-term global viability and competitiveness of the company," said Appleton.

Micron, however, declined to comment on reports about a possible spin-off of the CMOS image sensor business. The company reportedly had a falling out with a big customer: Nokia Inc.

Possible buyout
"I see the stories about Micron 'said to be' considering a private-equity buyout of the image sensor business. It's possible, but that kind of move should raise concerns about Micron's efforts to diversify from mainstream DRAMs," observed Robert Lineback, an analyst with IC Insights Inc.

"It's important to remember that Micron fabricates image sensors on aging DRAM frontends in Italy, Japan and Idaho [United State]. Micron would have to deal with these fab lines, if it were to spin out its image sensor business," Lineback said.

Perhaps the move makes sense for Micron in the long run. "The image sensor business will see increasing cost pressures and ASP erosion as more Asian memory foundries (in Taiwan and China) attempt to follow Micron's strategy of using depreciated 200mm fabs to crank out devices for foundry customers," the analyst added.

In fiscal year 2006, Micron's image sensor business represented 14 percent of its total sales ($749 million), compared to just 6 percent in fiscal 2005 ($303 milllion) and 2 percent in fiscal 2004 ($99 million), according to lineback.

Micron is the world's largest CMOS image sensor player with $845 million in sales in 2006, followed by STMicroelectronics ($540 millioin), OmniVision ($520 million), Toshiba ($455 million) and Sharp ($345 million), according to the firm.

- Mark LaPedus
EE Times




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