West News Wire: As the manufacturer of computer memory chips struggles to manage an excess supply despite a decline in demand, Micron will decrease its workforce by 10% next year and implement other cost-cutting measures.
According to Boise news station KTVB, Micron CEO Sanjay Mehrotra made the announcement of the restructuring during a quarterly conference call with investors on Wednesday and noted that pricing for computer memory products have “substantially declined” lately.
According to a filing with the Securities and Exchange Commission, the corporation would reduce its workforce by around 10% during 2023 through layoffs and voluntary departures. The corporation announced that employee bonuses will also be discontinued in 2019 and that executive compensation will be decreased for the remaining eight months of the 2023 fiscal year, which ends in August.
The Boise, Idaho-based company has about 48,000 employees across 38 sties in North America, Europe and Asia including more than 5,000 people in Boise. It has not announced where the layoffs will occur.
In September, Micron announced it was investing $15 billion through the end of the decade on a new semiconductor plant in Boise expected to create 17,000 American jobs. The following month, the company announced another semiconductor plant would be built in upstate New York, promising a long-term investment of up to $100 billion and a plant that could bring 50,000 jobs to the state. The restructure is not expected to affect those plans.
At the time, Mehrotra said the investments were made possible by the federal CHIPS and Science ACT of 2022, a $280 billion bill aimed at bolstering U.S. competitiveness against China. The law sets aside $52 billion to bolster the semiconductor industry, which had struggled to manufacture the memory chips powering smartphones, cars and computers because of COVID-related supply chain issues.
But in recent months, the company has seen a dramatic drop in demand. Unit volumes for personal computers and smartphones have declined in 2022, Mehrotra noted. The company primarily makes two kinds of chips: NAND, which saves data when power is removed, such as in a portable flash drive, and DRAM, which must be powered on to hold data.
“The industry is experiencing the most severe imbalance between supply and demand in both DRAM and NAND in the last 13 years,” he said. “Micron is exercising supply discipline by making significant cuts to our capital expenditures and wafer starts while maintaining our competitive position.”
The restructure plan was part of Micron’s announcement of financial results for the first quarter of the company’s fiscal year, which ended Dec. 1. Revenue came in at just under $4.1 billion for the quarter, down from more than $6.6 billion the previous quarter.
Still, Mehrotra said demand is expected to increase next year by about 10% for DRAM and about 20% for NAND.