Micron will close Israeli fab if no buyer is found

Micron Israel general manager Jonathan Wand: There are several potential buyers at varying stages, some of which are undertaking due diligence.

"Unless a buyer is found within months, we will begin closing the fab," said Micron Technology Israel general manager Jonathan Wand today. The process will take two years. Micron Technology Inc. (NYSE: MU) employs 1,200 people at its Fab 12 in Kiryat Gat (formerly Intel Corporation's (Nasdaq: INTC) Fab 18).

"If Micron decides to sell to another controlling shareholder, the government will have to use every tool it has to speak with any potential buyer to keep this activity," said Minister of Industry, Trade and Labor Shalom Simhon. "We realize that the Israeli government will have to provide a toolbox to deal with such crises. However, in setting future policy for industries of this kind, it will be necessary to make it clear that this won't be a way-station. A long-term investment policy is needed."

The government's main tool is grants of up to tens of millions of dollars and job subsidies. But this is in doubt, given the pending massive budget cut this year.

As for the value of Fab 12, Wand pointed to the acquisition of Micron's fab in Japan by Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM) two years ago for $140 million, half of which was for employee pensions. Micron sold Tower slightly obsolescent technology, and Tower is currently mentioned as a possible buyer of Fab 12.

Wand declined to mention the names of possible buyers, saying only, "There are several potential buyers at varying stages, some of which are undertaking due diligence after signing confidentiality agreements." He added that Fab 12 was profitable and competitive. The Fab's management plans to focus on analog processors. He says that the fab would require an investment of $20-30 million to convert to the new strategy, which he says is the strategic horizon for the next 10-15 years.

Published by Globes [online], Israel business news - www.globes-online.com - on February 20, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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