Major changes at Qimonda; CFO resigns

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Major changes at Qimonda; CFO resigns

Announces global restructuring program and agrees to sell stake in Inotera Memories to Micron

Tuesday, October 14, 2008

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MUNICH, GERMANY: Qimonda AG has announced a global restructuring and cost reduction program. The program is intended to reposition Qimonda in the market and substantially increase its efficiencies through a wide-ranging realignment of its business. As a part of this program, Qimonda also announced today that it has reached an agreement with Micron Technology, Inc. to sell its 35.6 percent stake in Inotera Memories Inc., its joint venture with Nanya Technology Corp., to Micron.

Under the terms of the agreement, Micron has agreed to purchase Qimonda's shares in Inotera for US$ 400 million in cash (approximately Euro 296 million) in two instalments. Qimonda will receive US$ 200 million for about one-half its holding in about one week, by which time Qimonda expects receipt of the governmental approvals and satisfaction of the other customary closing conditions necessary for this step, and the remaining US$ 200 million for the second half once the remainder of the conditions to the final closing of the transaction have been satisfied.

According to the agreement, Qimonda's share of Inotera's capacity will be ramped down over the eight months following the closing. Qimonda expects to record a one time book loss on its investment in Inotera of approximately Euro 300 million as a result of the transaction. Citigroup Global Markets Limited acted as exclusive financial advisor to Qimonda in connection with the transaction.

"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, CEO 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," he added.

Qimonda intends to focus on its core competencies in technology and product development by concentrating on infrastructure and graphics products on the basis of its new buried wordline technology in 300mm manufacturing facilities.

Consequently the following major structural measures will be implemented:

* Qimonda plans to ramp down manufacturing at its 200mm facility in Richmond, USA by January 2009. This will complete Qimonda's exit from 200mm production.

* The backend component and module manufacturing in Dresden, Germany is planned to be shut down by end of March 2009.

* In addition to these structural measures, the company will reduce its R&D and administrative expenses and its headcount, mainly in Munich, Dresden and Raleigh, to reflect the focused product portfolio and reduced production capacities.

These moves will affect approximately 3,000 employees globally. Qimonda expects the restructuring program to result in approximately Euro 450 million of annualized cost savings once it has been fully implemented. Management expects to have implemented the changes by the end of the third quarter of its financial year 2009. Qimonda expects to incur restructuring charges of about Euro 50 million in the next financial quarter in connection with the program, with the potential for additional charges in the two subsequent quarters that will be determined following negotiations with the works councils.

With the sale of the Inotera stake and the restructuring program, Qimonda has taken the first critical steps towards the new strategic direction that is necessary in these most challenging industry conditions. It continues to seek financial or strategic partnerships that can assist it in completing the process it has set in motion through the transaction and restructuring initiatives announced today. Qimonda may or may not be successful in these efforts. This process may also be supported by the ongoing efforts of Infineon Technologies AG, if successful, to dispose of its stake in Qimonda. Infineon, which currently owns approximately 77.5 percent of Qimonda's shares, issued a related announcement.

CFO Michael Majerus to leave Qimonda
Qimonda also announced the resignation of Dr. Michael Majerus from his position as Member of the Management Board and Chief Financial Officer of the company.

Dr. Majerus' resignation comes at his own wish for personal reasons, and he intends to pursue other interests.

"We thank Dr. Majerus for the years of service to Qimonda and its predecessor companies," said Peter Fischl, Chairman of the Supervisory Board of Qimonda AG. "We wish him well in his future endeavors." Qimonda's Supervisory Board has appointed Thomas Seifert, already a member of the company's Management Board and its Chief Operating Officer, to assume the additional duties of Chief Financial Officer for an interim period.

©CIOL Bureau

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