Oct. 9 (Bloomberg) -- Micron Technology Inc., the largest U.S. producer of memory chips, will cut about 2,850 jobs over the next two years and reduce production in an industry glut.

The cuts represent about 15 percent of its global workforce of 19,000. Micron will stop producing memory for digital cameras and mobile phones at its Boise, Idaho, headquarters, according to a statement today.

Tumbling prices have driven Micron to losses totaling $1.9 billion in the past two years. Memory-chip manufacturers have built too many production lines and are flooding the market with products that sell for less than they cost to produce.

``Any move to reduce global supply is welcome, but it's not a big swing,'' said Kevin Vassily, a Pacific Crest Securities analyst in Portland, Oregon. ``It will be helpful for these guys, though.'' He rates Micron ``sector perform'' and doesn't own it.

Micron rose 1 cent to $3.88 at 4 p.m. on the New York Stock Exchange. The stock has lost 46 percent this year.

The reduction will cost $60 million and lead to savings next year of about $175 million. Micron, which produces so-called Nand flash memory for cameras and other portable devices in a joint venture with Intel Corp., will continue making such chips in its other locations.

Plunging Prices

``The selling price of Nand has reached a price where, even if there was a rebound in selling prices, this capacity would never be profitable again,'' said Chief Executive Officer Steve Appleton in an interview today. ``The market is oversupplied.''

The closure won't have an impact on the joint venture with Intel, Chief Operating Officer Mark Durcan said. Micron and Santa Clara, California-based Intel operate plants in Lehi, Utah, and Manasas, Virginia, that produce the chips.

The Boise factory uses 200-millimeter wafers, while newer plants use 300-millimeter ones. The location, with 9,000 workers, accounts for 15 percent of Micron's Nand output, Durcan said.

Micron has reported seven annual losses in the past 11 years as memory-chip makers struggle to match the introduction of plants with short-term fluctuations in demand. The factories cost more than $3 billion and take more than a year to build.

The cost to restart plants is so high that manufacturers run them 24 hours a day, even when spot market prices are less than the price of production.

This month, Micron said its loss in the fourth quarter ended Aug. 28 widened to $344 million from $158 million a year earlier. The company is also being hit by weak pricing for its main product, dynamic random access memory, or DRAM, which provides the main memory in personal computers.

If prices stay at current levels, DRAM chips will sell for as much as 20 percent less in the first quarter than they did in the fourth, Mark Adams, Micron's head of sales, said on a conference call with analysts Oct 1. Prices of Nand chips are on course to drop as much as 35 percent, he said.

Micron competes with South Korea's Samsung Electronics Co., the largest maker of both types of memory chips, as well as Hynix Semiconductor Inc. and Japan's Toshiba Corp.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

Last Updated: October 9, 2008 16:08 EDT