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Thursday, 09/04/2008 9:12:37 AM

Thursday, September 04, 2008 9:12:37 AM

Micron has cash for potential acquisitions, official says

Tuesday , September 02, 2008 12:15ET

Aug 31, 2008 (The Idaho Statesman - McClatchy-Tribune News Service via COMTEX) -- Aug. 31--Micron Technology might buy all or part of a German competitor so wounded by the brutal computer-memory market that it may no longer be able to survive on its own, a Micron executive suggested Saturday.

The tough times confronting Micron have been even tougher on some of Micron's competitors, creating opportunities for Micron to buy, said Kipp Bedard, vice president of investor relations, in a radio interview.

"Our competitors are in terrible financial shape," Bedard said on Boise financial adviser Dave Petso's weekly radio show on KIDO-AM (580). "That does create opportunities for acquisition. We're looking at that right now."

Bedard said Micron is working with its new joint-venture partner, Nanya Technology Corp. in Taiwan. Nanya has a separate alliance with the German company, Qimonda, a unit of Infineon Technologies, both based in Munich.

Qimonda's fate has been in question for months. The Wall Street Journal reported Aug. 22 that Micron is in talks to buy Qimonda, which has about 13,500 employees.

Bedard did not directly confirm that Micron hopes to buy Qimonda, but said, "This particular company we're talking about in Germany is selling at point-four book value. You couldn't build capacity at even close to that price."

A book value of 0.4 means means the value of all of a company's stock is just four-tenths of the value of its assets. Book value is a guide in identifying underpriced stocks and in valuing a business facing liquidation.

Micron makes dynamic random-access memory, flash memory and image sensors. It is the only U.S.-based DRAM maker. Micron has lost money for six straight quarters as average selling prices have remained low, and it has laid off an estimated 1,100 people in the Treasure Valley since mid-2007, curbing its local employment to about 9,000.

But Micron still has cash to spend on acquisitions, and its financial health has been helped by cost-cutting, profitable specialty products and unexpectedly high sales of chips for use in cell phones, iPods and other products in emerging foreign markets, Bedard said.

Buying Qimonda could delay Micron's plans for a new manufacturing unit in Boise. Micron last March said the new fab would build computer memory chips on 12-inch, or 300-millimeter, silicon wafers rather than the costlier 8-inch, or 200-millimeter, wafers it has used for years. But the company has yet to start construction.

Bedard said Micron remains committed to building its next wholly owned fabrication unit "right here in Boise," although he was unsure when. He said Micron wants to continue to take advantage of opportunities that pop up unexpectedly, as the Nanya partnership did. In that venture, both companies are updating an aging Nanya plant in Taiwan to today's technology for making DRAM chips.

"Periods like this create opportunities," he said. "Companies have become so weakened that they can't continue to move on. That's one of the situations we have today."

He said the memory chip industry's financial health hasn't been this poor since the mid-1980s, when nine of the 10 U.S. DRAM makers failed, leaving only Micron.

Another weakened competitor is Hynix, rated by independent analysts as the second-largest DRAM producer after Samsung. Both are Korean companies. Hynix announced earlier this month that it would close its Eugene, Ore., plant, laying off 1,100 workers.

Bedard said Hynix is likely to survive in wounded condition. "Their installed production base is so antiquated that they're having to shut down facilities," he said. "They have enough money to stay in the game, but don't have enough money to invest heavily."

Hynix did not immediately respond to an e-mail Saturday requesting comment.

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David Staats
Copyright (C) 2008 The Idaho Statesman, Boise