The axe falls: Micron to close Kiryat Gat fab

The fab will stay in operation until early 2015, while Micron Technology seeks a buyer for it.

Micron Technology Israel's management notified its employees in Kiryat Gat this afternoon that the company had decided to transfer its manufacturing operations abroad. As a practical matter, the fab will stay in operation until early 2015, two years from now, but if the company cannot find a buyer for the production lines, or another solution, the fab's 1,300 employees will find themselves without jobs. No layoffs are planned in the near future, however.

Micron Technology Inc. (NYSE: MU), which began large-scale operations in Israel in early 2010, when it acquired Numonyx, acquiring Intel's original fab in Kiryat Gat, Fab 18, in the process. The fab produces NOR flash memory processors. The fab is no longer a global cutting-edge processor producer, although it is not obsolete either. Part of the fab's automation involved upgrading the technology to 45 nanometers - the size of the printed circuit on the silicon wafer - and some of the equipment is still intended for the older, 65-nanometer technology.

Micron recently decided on a strategic change and to focus on memory processors. Although the Kiryat Gat fab is designed for this field, the fab's automation is designed for 200-mm (8-inch) diameter silicon wafers, while the relevant current technology in terms of machinery efficiency and production is 300-mm (12-inch) diameter wafers, and some fabs in the world have already switched to 450-mm wafers. Micron decided not to upgrade the Israeli production line, and to transfer the relevant production to the US.

Investment bankers for Micron are due to begin seeking potential buyers for the fab soon. However, the company says, "If this option fails, Micron will gradually reduce its production at the fab, as a result of which it will adjust its manpower levels to the scale of production until and including 2015. The reduction in manpower is always a painful process, and Micron promises to help employees who will be affected by the move, and will provide them compensation, a benefits package, and placement services."

Published by Globes [online], Israel business news - www.globes-online.com - on December 13, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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