Micron announces 10% staff reduction, suspends bonuses

Semiconductor maker Micron introduced on Wednesday that it might scale back its headcount by about 10% in 2023, within the newest instance of a know-how business slowdown affecting employment.

Shares of Micron fell over 1% in prolonged buying and selling.

Idaho-based Micron has about 48,000 staff, in accordance with a latest SEC submitting. The corporate mentioned that it might hit its discount goal by way of voluntary departures in addition to layoffs.

Micron additionally mentioned it was suspending 2023 bonuses.

“On December 21, 2022, we introduced a restructure plan in response to difficult business situations,” the corporate mentioned in an SEC filing. “Underneath the restructure plan, we anticipate to scale back our headcount by roughly 10% over calendar yr 2023, by way of a mix of voluntary attrition and personnel reductions.”

Micron mentioned it anticipated a $30 million cost within the present quarter associated to the restructuring, which may even embrace much less funding into manufacturing capability and cost-cutting applications.

The transfer comes as Micron reported fiscal first-quarter 2023 results the place it missed analyst estimates for earnings and income, and forecast a bigger loss per share than anticipated within the present quarter.

Here is how Micron did versus Refinitiv consensus estimates for the quarter ending in December:

• Loss per share: $0.04, adjusted, versus $0.01 estimated
• Revenues: $4.09 billion versus $4.11 billion estimated

Micron mentioned it anticipated a lack of 62 cents per share on income of $3.8 billion within the present quarter. Analysts had anticipated steerage of a lack of 30 cents per share on $3.75 billion in gross sales.

Micron is greatest recognized for supplying reminiscence to pc makers, however it’s dealing with an surroundings the place PC gross sales have already started to slow or shrink, whereas server gross sales are anticipated to indicate little development in 2023.

Micron CEO Sanjay Mehrotra mentioned in prepared remarks that there’s an excessive amount of reminiscence provide and never sufficient demand, which has resulted within the firm retaining extra stock and dropping pricing energy.

“Within the final a number of months, we’ve got seen a dramatic drop in demand,” Mehrotra mentioned, in accordance with the ready remarks.

He mentioned he expects the corporate’s profitability to “stay challenged” by way of the tip of 2023 however that the agency expects income and free money circulate to get better later in 2023. Micron mentioned it has suspended share repurchases.

Micron’s restructuring comes after different semiconductor corporations have introduced hiring freezes or layoffs. In October, Intel introduced that it would lay off workers as a part of a plan to chop $10 billion in spending. Nvidia introduced a hiring slowdown over the summer time and Qualcomm noted its hiring freeze in November.

Nevertheless it’s not simply semiconductor corporations adjusting after two pandemic-fueled years of development and provide points. Tech companies including Meta, Twitter, Snap, Stripe, and Tesla have additionally lower workers as corporations gird for a possible recession and better rates of interest.