SAN FRANCISCO -- Micron ( MU) will stop making flash memory chips at one of its three factories dedicated to the product, as it seeks to mitigate the pain caused by a severe industry downturn. The Boise, Idaho chipmaker said Thursday that it will also layoff 15% of its global workforce over the next two years. The moves mark the most significant acknowledgement yet by Micron that the protracted downturn in the memory chip business, coupled with the financial crisis, is forcing the company to make drastic changes to its business operations. Micron said the move is expected to result in more than $175 million in operating margin benefit, while it will incur about $60 million in restructuring charges. Shares of Micron were up 12 cents, or 3%, to $3.99 in intra-day trading. The decision, which Micron executives said was finalized two days ago, was made through discussions with Intel ( INTC), which produces flash memory with Micron through a joint-venture called IM Flash Technologies. Micron said prices for NAND flash chips are now "significantly" below its manufacturing costs. "The selling price
of NAND flash chips now has dropped so far that we don't think the selling price will ever recover to a point where it makes sense to run this capacity," said Micron CEO Steve Appleton in an interview with TheStreet.com. Micron is essentially shuttering all output from equipment that produces NAND flash chips on 200mm silicon wafers -- which accounts for 15% of the company's total flash output. Micron will continue producing flash chips at a pair of factories with tools that process 300mm wafers, which produce more chips per wafer and are thus inherently more cost-efficient.