Micron Technology Inc., one of America’s largest memory chip providers announced that it would cut workforce by nearly 15% and reduce production over the next two years.
Today’s statement informed that Micron would stop making Digital Camera and Mobile Phone memory at it’s Boise, Idaho headquarters. The so-called NAND flash memory chips, which are produced in collaboration with Intel Corp., will be produced at other locations.
The main cause of this loss is the drop in the prices of the NAND flash memory chips, which has gone so low, that even if there was to be a rebound, it would not be very profitable anymore, as the market is oversupplied.
Over the last eleven years, Micron has reported seven annual losses, as they need to keep up with the short-term fluctuating market demand. When the demand goes high, manufacturers set up factories to match the needs, but when demand goes down again, manufacturers keep the factories running to compensate the cost of setting up.
Micron reported that their losses at the end of the fourth quarter went up by $186 million, and it was also hit by lessening prices in it’s market for DRAM, or Dynamic Random Access Memory, which is a main component in today’s Personal Computers.
In the last two years, drop in prices has lead Micron into a loss of approximately $1.9 Billion. The lay off would cost Micron a total of $60 million, but would generate savings of nearly $175 million in the next year.