Texas Instruments Inc. said Thursday it will eliminate 3,500 jobs and sell its troubled memory chip business to Micron Technology Inc. for about $830 million.
Texas Instruments said it will take a second-quarter charge of unspecified size for the restructuring, which it expects to result in annual savings of $270 million.
The sale to Micron is the latest in a string of divestitures by Texas Instruments over the last three years as it focuses on more specialized and profitable digital signal processor chips, which are used in cellular telephones and the audio and video functions of electronic equipment.
The job cuts will be made through layoffs, voluntary programs, attrition and outsourcing as well as consolidating smaller facilities, TI said. After the cuts and the sale to Micron, TI will have 36,000 employees, down from 44,000 now.
Texas Instruments has been eager to shed its dynamic random-access memory chip business. Average DRAM prices dropped 60% from the first quarter of 1997 to the first quarter of 1998, resulting in widening losses for TI's memory operations.
The sale doesn't mean that Texas Instruments is completely free of the DRAM market. Under the deal, the company will receive about 29 million shares of Micron common stock, becoming its largest stockholder with an initial 12% stake. TI also will receive convertible notes that will raise TI's stake in Micron to about 17% once they are converted. Micron also will assume about $190 million of Texas Instruments debt.
Additionally, TI will give Micron $750 million in cash to refurbish the chip plants, which aren't as advanced as Micron's.
Micron will issue debt securities to TI to cover the loans.
Boise, Idaho-based Micron on Thursday reported a loss of $106 million, or 50 cents a diluted share, in the fiscal third quarter ended May 28, compared with net income of $96.8 million, or 45 cents a share, a year ago.
Micron shares rose 69 cents to close at $22.19, while shares of Dallas-based Texas Instruments rose $3.63 to $54.50, both on the New York Stock Exchange. The transaction was announced after the close of trading.
Bloomberg News and Reuters were used in compiling this report.