Infineon writes down Qimonda stake by 1 billion euros

FRANKFURT (Reuters) - Chipmaker Infineon (IFXGn.DE: Quote, Profile, Research, Stock Buzz) has written down the value of its majority stake in Qimonda (QI.N: Quote, Profile, Research, Stock Buzz) by 1 billion euros ($1.6 billion) in preparation for a sale to an unspecified buyer of the money-losing company.

Infineon issued its statement late on Monday just before memory chipmaker Qimonda reported another quarter of deep losses. Qimonda also said it would cut costs by more than planned, partly by cutting 10 percent of its global work force.

Qimonda, which has continued to burden Infineon's earnings since Infineon listed it in New York in 2006, reported a loss before interest and tax (EBIT) of 468 million euros for the January-March quarter, worse than most analysts had expected.

Infineon said it would reclassify all assets and liabilities related to its 77 percent stake in Qimonda as "assets held for sale" and deconsolidate them, and reiterated its intention to cut its stake to a minority by no later than next year.

The German chipmaker has said it may distribute Qimonda shares to its own shareholders in the form of an extraordinary dividend if it does not find a buyer.

Qimonda has already slashed its capital expenditure plans for this year to save money and help reduce a glut in the market for standard DRAM memory chips, whose prices have collapsed by about 90 percent over the last year.

"In general, Qimonda expects a slowdown of supply growth in the market, in line with market researchers, eventually leading to a more balanced supply and demand situation," it said.

Qimonda said it would cut costs by 180 million euros per year from current levels starting from the 2008/09 fiscal year that begins in October, partly through the job cuts and also by reducing recurring expenses, including research costs.

(Reporting by Georgina Prodhan, editing by Richard Chang)