This year has been plagued by stories of insolvencies, freefalling financial figures and production cutbacks. Following in the footsteps of many of its peers, U.S.-based MEMC, which manufactures wafers and silicon for the semiconductor and solar industries, is the latest company to announce a number of streamlining measures aimed at coping with the current conditions.
The company says the new measures will see it incur around a $700 million charge, of which approximately $520 million is non-cash, in Q4 2011. Broken down, this figure represents roughly $475 million in asset impairments, approximately $175 million in contract termination charges, and around $50 million in severance benefits to terminated employees.
Additional non-cash charges will include an estimated $200 million to $400 million of goodwill impairment; and between $225 million to $275 million of deferred tax asset valuation allowance.
Overall, says MEMC in a statement released, it will make over 1,300 redundancies, which represents around 20 percent of its workforce. In the U.S. it says that 250 jobs will go. It was not disclosed where the other job losses will occur. Meanwhile, 41 percent of the job losses will affect the semiconductor materials segment, and 47 percent, the solar materials segment.
In Italy, MEMC says that it will idle its 6,000 metric ton Merano polysilicon facility. It added that it "may close it unless dramatic feedstock, power, and other cost reductions are achieved in the near term. The company is working with the province and key suppliers to determine the feasibility of such reductions."
Furthermore, the company will reduce production capacity at its Portland, Oregan crystal facility and limit the ramp up of its wafering facility in Kuching, Malaysia to 300 megawatts (MW). Again, the company did not disclose any further details about these decisions.
Finally, says MEMC, SunEdison is to be merged with the companys solar materials business, effective on January 1.
Due to the changes, MEMC has revised its Q4 2011 guidance for a second time. At the start of November, the company said it expected to achieve non-GAAP sales in the range of $800 million to $1.1 billion. These figures have now been revised down to between $789 million to $861 million. It also expects to see a non-GAAP net loss of $95 million.
In the statement, it added, "Capital market and liquidity risks in Europe may impact the timing of planned fourth quarter 2011 SunEdison project sales and pricing, which would result in a shift of these project sales into 2012 and some reduction in both GAAP and non-GAAP fourth quarter revenues and EPS discussed above."
Commenting, Ahmad Chatila, MEMC’s CEO said, "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."