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Saxony mulls aid options for Qimonda, may take stake

DRESDEN/MUNICH, Nov 27 (Reuters) - The German state of Saxony is considering potential state support for loss-making chipmaker Qimonda (QI.N: Quote, Profile, Research, Stock Buzz), state Economy Minister Thomas Jurk said.

Several industry sources told Reuters on Thursday that Saxony's government was considering helping out Qimonda with a three-digit million euro sum that could include credit, debt guarantees or a stake purchase.

Two people familiar with the situation said the state may also take a 25-27 percent stake in Qimonda, which employs around 3,200 people in state capital Dresden.

Talks over the state taking a stake in the company had progressed, but Saxony's government was still sceptical, they said.

Jurk declined to comment on potential aid and only said there were several possibilities.

He said late on Wednesday that the state government was assessing all aspects and possibilities, such as using state funds or involving the European Union.

"It depends on the model," Jurk said, adding that results from the assessment were expected by the end of the year.

Qimonda, like its competitors, is struggling with an ongoing slump in prices for dynamic random access memory (DRAM) chips, used mainly in PCs, and has tried to compensate with strict cost cutting measures.

Qimonda shares were up 67 percent at $0.15 by market close on Wednesday in New York. Parent company Infineon (IFXGn.DE: Quote, Profile, Research, Stock Buzz) shares dropped 3.19 percent to 1.9 euros by 1532 GMT on Thursday, underperforming the DJ Stoxx technology index which was up 2.06 percent.

Two sources familiar with the situation told Reuters that Infineon had initiated a meeting at the federal economics ministry in Berlin about potential aid for Qimonda.

The government has set up a nearly 500 billion euro ($648 billion) fund to stabilise the country's financial sector and is also considering help for Opel, the German unit of General Motors (GM.N: Quote, Profile, Research, Stock Buzz) that is seeking financial guarantees given its parent's financial problems.

Infineon, which carved out its former unit in 2006 and listed it on the New York Stock Exchange in hopes of cutting its exposure to the volatile memory chip market, has been trying to find a buyer for the stake in Qimonda it owns.

(Reporting by Dirk Mueller-Thederan in Dresden, Jens Hack in Munich and Gernot Heller in Berlin; Editing by Rupert Winchester)

release time :11/28/2008
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