Infineon rejects aid offer from state of Saxony

Technology company Infineon AG on Tuesday rejected an offer from the German state of Saxony to help it bailout its memory chip unit Qimonda AG, but said that it was open to further talks with the state government.

Officials from Saxony said earlier in the day that they were ready to provide Qimonda _ which has fallen on difficult times through a market glut and decline in sales _ with euro150 million ($207 million) in capital, as long as the parent company also came up with euro150 million of its own cash to help the struggling unit.

A condition of the state money would be that the company guarantees that Qimonda production remains in Dresden.

Infineon said in a statement that it could not accept the conditions laid down by Saxony. It said its own proposal sent to Saxony was the most it could afford.

"We deeply regret that the state of Saxony has not taken our proposals into account," said Peter Bauer, Infineon's chief executive.

The Saxony economy minister Thomas Jurk urged Infineon to accept the offer to try to stave off more layoffs at Qimonda, which has already announced 1,000 German job cuts.

About 2,000 jobs remain at Qimonda in Dresden and about 500 of those are currently at risk.

Earlier this month, Qimonda said it may face bankruptcy if it fails to find new investors or the cash needed to operate in the coming weeks.

Neubiberg-based Infineon Technologies AG spun off Qimonda in 2006 and still holds a 77.5 percent stake.

Shares of Infineon closed up more than 3 percent at 0.69 euros ($0.93) in Frankfurt.

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On the Net:

http://www.infineon.com

http://www.qimonda.com