MEMC slashes jobs, outlook
12/8/2011 1:50 PM EST
SAN FRANCISCO—Silicon wafer supplier MEMC Electronic Materials Inc. said Thursday (Dec. 8) it would eliminate more than 1,300 jobs, or about 20 percent of the company's global workforce, as part of a series of restructuring actions to be taken this month and in the first quarter of 2012.
MEMC (St. Peters, Mo.) said it will also idle, close or reduce the capacity of production facilities. The company said it would idle its production facility in Merano, Italy, which produces up to 6,000 metric tons of polysilicon per year. The company said it may close the Merano facility permanently unless dramatic cost reductions are achieved in the near future.
MEMC will also reduce production capacity at its silicon crystal facility in Portland, Ore., and limit the ramp of a wafering facility in Kuching, Malaysia.
MEMC said it would also consolidate its solar materials and SunEdison business units into a single solar energy business unit, effective Jan. 1, 2012.
"We believe these actions strengthen MEMC in the near term and position us for more profitable growth in our core businesses—semiconductor wafers and solar energy systems," said Ahmad Chatila , MEMC's CEO, in a statement. "Changed market conditions require that we improve productivity across all segments and in solar move to a more balanced manufacturing model aligned with our downstream business."
Of the job cuts, roughly 250 are in the U.S., MEMC said. Forty-one percent of the jobs being eliminated are from the company's semiconductor materials division, while 47 percent come from the solar materials division, the company said.
MEMC also revised its fourth quarter sales and earnings targets. The company said it now expects fourth quarter sales in accordance with generally accepted accounting principles (GAAP) to be between $523 million and $585 million. The company expects to report a GAAP net loss for the quarter of $5.20 to $6.38 per share.
On a non-GAAP basis, excluding charges, MEMC said it now expects fourth quarter sales to be between $789 million and $861 million, down from a non-GAAP sales target of between $800 million and $1.1 billion announced last month.
As a result of market conditions and the restructuring actions, MEMC said it expects to take a charge in the fourth quarter of about $700 million , of which approximately $520 million is expected to be non-cash. Cash use associated with the restructuring is expected to be approximately $180 million, more than half of which is expected to occur after 2012, MEMC said. The company said it expects the restructuring to save $200 million per year.
Charges include about $475 million in asset impairments, about $175 million in contract termination charges and about $50 million in severance benefits to terminated employees, MEMC said.