Micron to cut 10% of workforce as demand dips for computer chips

Semiconductor firm Micron announced that it would reduce its headcount by about 10% over the next year in response to lacklustre demand for computer components.  

The chipmaker joined the list of latest tech companies that are on a spree to cut jobs and are putting a freeze on hiring. Many big companies like Amazon, Apple, Google, Hewlett-Packard and Intel, have announced a reduction of workforce for next year. Besides, companies like Meta and Twitter have set examples of companies that have laid-off substantial workforce in response to the challenging economic conditions and overhiring, among other issues.  

The US-based Micron has about 48,000 employees, according to a recent SEC filing. The company said that it would hit its reduction target through voluntary departures as well as layoffs. It has also suspended bonuses of employees in the next one year.  

“On December 21, 2022, we announced a restructure plan in response to challenging industry conditions,” the company said in an SEC filing. “Under the restructure plan, we expect to reduce our headcount by approximately 10% over calendar year 2023, through a combination of voluntary attrition and personnel reductions.”  

The filing further said that Micron expected a $30 million charge in the current quarter related to the restructuring, which will also include less investment into manufacturing capacity and cost-cutting programs.  

The move comes as Micron reported fiscal first-quarter 2023 results where it missed analyst estimates for earnings and revenue.   

Micron supplies memory to computer makers, but it is facing an environment where PC sales have already started to shrink, and server sales are also expected to show little growth in 2023.  

Micron is a major producer of DRAM, a type of memory found in many modern computers and other electronic devices. While consumer demand for computer components such as DRAM soared last year, it has fallen sharply this year, according to IC Insights and other market reports.  

Micron CEO Sanjay Mehrotra, said in a statement that there is too much memory supply and not enough demand. This has resulted in the company keeping more inventory and losing pricing power.  

However, Micron has said that it expects the slowdown to be temporary and has forecast demand for memory chips to double by 2030.