Qimonda facing liquidity crisis

German chipmaker Qimonda on Monday warned that it might run out of money at the start of next year if it fails to secure financial help.

The company, majority-owned by Infineon, said in a statement it was in talks with possible strategic and financial investors and that it could announce a deal “in the next few weeks”.

Central to these options, according to people familiar with talks, is a loan guarantee of up to €500m from the federal government and the Saxony state government, which has backed the development of state capital Dresden into a centre for computer chip production.

Qimonda employs 13,500 people worldwide.

The company has suffered from ruinous competition in the market for memory chips. This has been made worse by the credit crunch, which has sharply put the brakes on global economic growth, especially in the past few weeks.

The Munich-based company said it was postponing the release of its 2008 results, original due on Tuesday, until mid-December. It signalled its operating loss would nudge €2bn in the 12 months ending September 30.

While sales in the last quarter of that period rose 24 per cent in annual comparison to €476m, Qimonda said operating loss would be larger than the €386m seen in the third quarter, further enlarging a nine-month deficit of €1.4bn.

Qimonda warned it would “face liquidity shortfalls in portions of its operations” between January and March of next year, should it fail to find new investors and should the situation in the chip market remain poor and attempts to cut costs fail.

Its woes are weighing on its parent, chipmaker Infineon, which holds a 77.5 per cent stake. Infineon wants to reduce its stake to below 50 per cent, in order to avoid having to incorporate Qimonda’s results into its consolidated numbers.

Infineon, which makes specialised chips for cars and other machines, has declined to help Qimonda financially, although it has helped the company in negotiating with governments in Berlin and Dresden, according to people familiar with the events.

Saxony’s trade and industry minister Thomas Jurk in recent days signalled his intention to help maintain the chip production facilities in Dresden – Qimonda, Infineon and AMD all have factories there – although the European Union would have to sign off any state aid offered.