Memory-chip manufacturer Qimonda AG plans to cut 10 percent of its work force worldwide as part of a comprehensive cost-reduction program, the company said.

The German company's only North American manufacturing plant is in eastern Henrico County, where Qimonda employed the equivalent of 2,500 people as of Jan. 1.

Company spokesman Glen Haley said no decision has been made yet as to where, what jobs and how many jobs Qimonda will cut from its 13,500 global work force at five factories and six major research and development centers.

The company will work as fast as it can to give employees the details about the job reductions, Haley said. Qimonda said it plans to have the cost reductions in place by the start of its 2009 fiscal year, which begins Oct. 1.

Workers at the company's Sandston plant produce memory chips for computers and other electronics on 200and 300-millimeter silicon wafers. The plant's production is part of the company's global manufacturing strategy, Haley said.

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Qimonda is focusing its production strategy on making chips for more specialized electronics markets, such as gaming consoles, digital televisions and global positioning systems, where there is a strong growth potential, Haley said.

The company continues to make memory chips for computers, but that market is served by several competitors, and chips have become a commodity.

"The drivers going forward will be on non-PC [non-personal computer] applications," Haley said.

The possible job reduction at the Henrico plant comes at a time when the company has replaced its managing director there for the third time in two years. Thomas Fu takes over as vice president and managing director of the plant on Saturday, replacing Steve Erickson, who is leaving because of personal reasons.

On Monday, Qimonda reported a loss for its fiscal second quarter that ended March 31 of 482 million euros (or $762.2 million based on yesterday's exchange rate), or 1.41 euros ($2.25) per share. That compares with a net profit of 57 million euros ($91.2 million), or 0.17 euros (27 cents per share), for the same period last year.

Revenue fell 58 percent to 412 million euros ($658 million), compared with sales of 984 million euros ($1.57 billion) during the same period a year ago. The sales decline, the company said, can be attributed to a 67 percent average decline in the selling price for the company's products and the weakness of the U.S. dollar.

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Since the market turned down last year, Qimonda said it has cut capital expenditures by roughly half, completely phased out less productive 200-millimeter factories and reduced capacity at 300-millimeter plants. The second phase of its restructuring involves the cost reduction program, which is intended to lower company costs annually by 180 million euros ($287.6 million).

Restructuring charges will be accrued before the end of this fiscal year.

Qimonda shares closed at $3.56 in trading on the New York Stock Exchange yesterday, down 7 cents.
Contact Greg Edwards at (804) 649-6390 or gedwards@timesdispatch.com.