Qimonda, one of the world's largest manufacturers of dynamic RAM, has filed for insolvency in the German courts.
The memory maker announced the opening of insolvency proceedings on Friday, with outside lawyer Dr Michael Jaffé taking on the role of preliminary insolvency administrator. As with Chapter 11 bankruptcy protection in the US, a company that is insolvent is allowed to carry on operating while it makes changes to return to solvency.
Qimonda, which was spun off from the chipmaker Infineon in 2006, said the proceedings will also affect its lead fabrication plant business in Dresden. The company said it now intends to reorganise those businesses in line with a restructuring programme it revealed in October.
"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," Kin Wah Loh, Qimonda's president and chief executive officer, said in a statement. "We assume we will be able to continue our business within the context of our restructuring programme with the support of the temporary insolvency administrator and our employees."
Qimonda said the insolvency followed a "massive drop" in DRAM prices. The memory-making industry has been hit hard by the recession; in mid-December, Toshiba and Sandisk announced cuts in production due to falling demand, while low memory prices also contributed to Samsung's recently announced, first-ever quarterly loss.
The German company also said it had had difficulty accessing credit. A financing plan involving the Free State of Saxony (of which Dresden is the capital), Infineon and a "leading Portuguese financial institution and additional banks" could not be completed in time to avoid insolvency, it said in its statement.
Qimonda now plans to focus on core areas, such as its infrastructure and graphics-oriented lines, as well as its Buried Wordline DRAM technology.