MEMC set to shift wafer production to Asia with the loss of over 500 jobs

Tough business conditions and polysilicon production problems have surfaced at MEMC, forcing the company to adjust revenue guidance and announce plans to shift some of its ingot and wafer production to Asia, which will affect approximately 540 employees. The company had previously announced layoffs in three of its U.S. based manufacturing facilities. MEMC said that it would cease production of ingots and wafers at facilities in Sherman, Texas and St. Peters, Missouri, which would begin in stages starting in 2010 and through early 2011.

"We must continue to aggressively drive all unnecessary costs out of the business during these extraordinary times,” noted Ahmad Chatila, MEMC’s  Chief Executive Officer. “We will be shifting this high-volume production closer to a number of our customers, who are located in lower cost regions. This will allow us to reduce manufacturing costs and to serve our customers effectively, with the right cost-competitive capacity - in the right places - to meet their needs."

Silicon wafering operations in St. Peters will cease by the end of the second quarter of 2010, while epi and crystal operations will stop by the end of the first quarter of 2011. The MEMC corporate headquarters, as well as research and development and advanced Silicon on Insulator (SOI) manufacturing, are expected to continue at the St. Peters location.

Equipment production problems at its polysilicon facility in Pasadena, Texas saw the majority of the plant closed on August 7, 2009 with normal production levels not expected to be resumed until near the end of September, 2009.

MEMC guided revised revenue for the third quarter to be in the range of US$285-US$315 million, down from previous guidance of between US$300-US$350 million. Margins will also take a hit, down into ‘single digit’ territory compared to margins of 12.3% in the second quarter and guidance for margins to rise slightly.