American chip maker cuts 10% of workforce

The brutal conditions prevailing in the technology market were again evident yesterday when Micron Technology, the US-based maker of computer memory chips, announced plans to cut 1,800 jobs.

The losses, which represent about 10% of the workforce, are only the second round of layoffs in the firm's history. The last large-scale cuts were in 1985, seven years after it was founded, during another downturn in the chip market.

Last year Micron recorded losses of $907m (£568m) and in the first quarter of its present financial year it was $316m in the red, reflecting the continuing downturn in the international chip market.

There are still scant signs of a recovery in the technology market - Microsoft last month said it saw no sign of a pick-up this year and warned that earnings would be lower than forecast as a result.

Micron chairman Steve Appleton said the cuts would enable the company to "lower our cost structure, allow us to better focus our product portfolio and continue to invest in new technology". A number of products in development will be put on hold.

Mr Appleton stopped taking a salary 15 months ago and said he would not accept his pay cheques until the company returned to profit.

Shares in Micron, which were worth $100 in late July 2001, edged three cents higher yesterday to $7.47.

Micron has been critical of the South Korean government for providing subsidies to its chief rivals. In November, the company filed a lawsuit against Korea's Hynix Semiconductor and Samsung Electronics - the largest maker of memory chips - alleging unfair practices.

The impact on the broader chip market was softened yesterday after an analyst at investment bank Morgan Stanley said the world's largest maker, Intel, was about to benefit from lower costs and a new product cycle - including a new chip for wireless devices said to "supercharge" access to the internet.

Cost cutting and higher pricing were behind a doubling in Intel's profits during the most recent quarter, despite lacklustre sales.

Last month, Micron said it planned to raise some $500m from the sale of convertible debt to support spending on advanced chip-production tools as it seeks to expand a line of chips with features that are 500 times narrower than a human hair.