Micron Technology (MU) today announced a 15% workforce reduction and restructuring of its memory operations. The company said Thursday the combination of declining customer demand and product oversupply in the marketplace has driven selling prices for NAND flash memory way below manufacturing costs. Cost and price are tied together by supply-demand dynamics. As a result, Micron will shut down its NAND flash memory plant operation in Boise.
Of the 2,850 jobs being cut, which will begin with a voluntary program, about 1,500 will be in Boise, Idaho, where the semiconductor co. is headquartered.
“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,” said Steve Appleton, Micron Chairman and CEO. “Operation shutdowns and related workforce reductions are always painful, but we are pursuing these actions to maintain the competitiveness of the company.”
Micron said it expects cash restructuring and other related expenses to be approx. $60 million related to the job cuts. The next year’s cash operating margin benefit is expected to exceed $175 million.
The job cuts, according to the company, will take place over the next two years. Micron shares closed at $3.99, up $0.11 in the NYSE.