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FRANKFURT, Germany - German memory-chip maker Qimonda AG declared bankruptcy Friday, saying a rescue package of loans agreed last month was insufficient to keep it viable.
Qimonda said a massive drop in prices of the dynamic random access memory chips it produces and decreased access to financing on the capital markets had led to the deterioration of its financial position.
The company in December had secured a rescue package of euro325 million ($421.98 million) in loans from the government of Saxony, parent company Infineon and a Portuguese state bank in order to try and stave off collapse.
But the financing package failed to materialize in time to solve its problems, the company said.
"The governor of Saxony, in cooperation with Portugal and Infineon, created a package that, in the end, fell through," said Economy Ministry spokeswoman Beatrix Brodkorb. "Qimonda couldn't make it work."
The company added that it had recently become clear it would need financing for the current year as a result of market price drops in December and a delay in negotiations for important investments.
Qimonda, headquartered in Munich with a large manufacturing base in Dresden, said it plans to move ahead with an ongoing restructuring program. A Munich administrative court will appoint a preliminary insolvency administrator to assess the situation in the coming days, it said.
"German insolvency law offers the opportunity to accelerate the restructuring process that has already been started in order to reposition the company back onto a solid base," said Kin Wah Loh, chief executive of Qimonda, in the statement.
"We assume we will be able to continue our business within the context of our restructuring program with the support of the temporary insolvency administrator and our employees."
Qimonda has more than 12,000 workers worldwide, with some 3,500 in Saxony, 1,500 in Munich and also 1,800 in Portugal.
Shares of Infineon, which spun off Qimonda in 2006 but still holds a 77.5 percent stake, closed down 4.9 percent at euro0.68 (88 cents) in Frankfurt.
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