Qimonda Files for Insolvency

Chipmaker couldn't secure rescue

German chipmaker Qimonda, in dire straits even before the global economy hit the skids, filed for insolvency on Jan. 23 after last-ditch talks to secure a state-led rescue failed. The heavily loss-making firm, one of Europe's few remaining chipmakers, threw in the towel after being hit by the slowdown and a further worsening of the semiconductor market, its majority shareholder Infineon said.

"Everyone involved fought to the very end in an attempt to save Qimonda. We sincerely regret that these efforts have not ultimately succeeded in achieving the desired outcome," Infineon chief executive Peter Bauer said.

Only last month Qimonda secured a 325-million-euro (US$450 million)rescue package from the German state of Saxony, the federal government and a Portuguese development bank and Infineon. But sources said that the firm, which has been in trouble since before the global economy hit the rocks, still needed another 300 million euros to be able to continue operating. An additional 280 million euros in guarantees from the federal government and from Saxony, the eastern state where the firm is a major employer, were also contingent on its raising the funds.

The economically depressed Saxony, where Qimonda is a major employer, refused to put up another 150 million euros and talks in Berlin with Chancellor Angela Merkel's federal government also failed.

Infineon, a former subsidiary of German industrial conglomerate Siemens, last month issued a highly gloomy report for itself and Qimonda, notching up a loss of three billion euros for its financial year ending September 30.

In October Qimonda said it was cutting 3,000 jobs. In 2008 it employed 12,200 people worldwide, including 4,600 in Germany and 2,800 in Richmond, Virginia.

"German insolvency law offers the opportunity to accelerate the restructuring process that has already been started in order to reposition the company back onto a solid base," Qimonda chief executive Kin Wah Loh said. "We assume we will be able to continue our business within the context of our restructuring program with the support of the temporary insolvency administrator and our employees."

Copyright Agence France-Presse, 2009

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