Micron Technology Shutters NAND Flash Memory Production Plant, Cuts Work Force

Micron Technology, one of the world's largest producers of memory chips, is shutting down its NAND flash memory business that it co-owned with Intel. Micron will also cut 15 percent of its worldwide work force. The closing of the NAND flash memory plant comes as Micron, Intel and other chip memory makers are struggling with the falling prices of DRAM and NAND memory.

Micron Technology, one of the world's largest producers of memory chips, is closing down its NAND flash memory production facility in Boise, Idaho, and will cut 15 percent of its 22,600-person work force, the company announced Oct. 9.

In closing this facility, Micron is reacting to the continuing worldwide drop in the price of memory. The prices for DRAM (dynamic RAM) and NAND flash memory have continued to fall due to oversupply in the market. On Oct. 2, the SIA (Semiconductor Industry Association) released a report that said while the entire semiconductor industry saw sales increase 5.5 percent from August 2007 to August 2008, the price of DRAM and NAND flash memory continued to fall. The forecast could get worse if the financial crisis continues and consumer spending slows down.

On the same day that Micron announced it would close its NAND flash memory plant, research company iSuppli released a report that lowered its 2008 forecast for worldwide DRAM revenue by 5.4 percent. In 2008, memory, whether DRAM or NAND flash, is expected to account for nearly 10 percent of all worldwide semiconductor revenue, which is expected to top $280 billion.

Micron reported a $344 million fourth-quarter loss on Oct. 1, which was due in part to falling prices of memory chips and seemed to foreshadow the Oct. 9 news.

Click here to read more about the SIA report and the state of the semiconductor industry in the current financial crisis.

"Micron is in a strong position relative to our competitors, as evidenced by our balance sheet and cash flow, but we are not immune to the difficult global market conditions that are affecting us all," Micron CEO Steve Appleton said in a statement.

All of these events seemed to have pushed Micron to close its IM Flash Technologies facility, a joint venture company between Micron and Intel. The closing of the facility will reduce NAND flash production by 35,000 wafers per month, according to Micron.

In addition to closing the facility, Micron plans to eliminate about 15 percent of its global work force. The layoffs will take place during the next two years.

While Micron is closing down one production facility, it will continue to manufacture NAND flash memory with Intel. Chuck Mulloy, an Intel spokesperson, said while the Idaho facility, which produced older, 200-millimeter wafers, would close, both companies were still manufacturing NAND flash memory at two plants using more up-to-date 300-mm technology. Those two plants, in Virginia and Utah, are currently producing 50-nanometer memory chips and there are plans to ramp up to 34-nm production in the future.

Earlier in 2008, Intel spun off its NOR memory division into a new company to help stop the losses from falling prices. While NAND flash technology has been used as the main memory component for devices such as Apple's iPod music player, NOR technology has been used more in devices such as cell phones.