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Micron broadcasts 10% staff reduction, suspends bonuses

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Semiconductor maker Micron announced Wednesday that it would cut back its headcount by about 10% in 2023, in the most recent example of a technology industry slowdown affecting employment.

Shares of Micron fell greater than 1% in prolonged trading.

Idaho-based Micron has about 48,000 employees, based on a recent SEC filing. The corporate said it might hit its reduction goal through voluntary departures in addition to layoffs.

Micron also said it’s suspending 2023 bonuses.

“On December 21, 2022, we announced a restructure plan in response to difficult industry conditions,” the corporate said in an SEC filing. “Under the restructure plan, we expect to scale back our headcount by roughly 10% over calendar 12 months 2023, through a mix of voluntary attrition and personnel reductions.”

Micron said it expected a $30 million charge in the present quarter related to the restructuring, which may also include less investment into manufacturing capability and cost-cutting programs.

The move comes as Micron reported fiscal first-quarter 2023 results where it missed analyst estimates for earnings and revenue, and forecast a bigger loss per share than expected in the present quarter.

Here’s 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 said it expected a lack of 62 cents per share on revenue of $3.8 billion in the present quarter. Analysts had expected guidance of a lack of 30 cents per share on $3.75 billion in sales.

Micron is best known for supplying memory to computer makers, but it surely is facing an environment where PC sales have already began to slow or shrink, while server sales are expected to indicate little growth in 2023.

Micron CEO Sanjay Mehrotra said in prepared remarks that there is simply too much memory supply and never enough demand, which has resulted in the corporate keeping more inventory and losing pricing power.

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“Within the last several months, we’ve seen a dramatic drop in demand,” Mehrotra said, based on the prepared remarks.

He said he expects the corporate’s profitability to “remain challenged” through the top of 2023 but that the firm expects revenue and free money flow to get better later in 2023. Micron said it has suspended share repurchases.

Micron’s restructuring comes after other semiconductor firms have announced hiring freezes or layoffs. In October, Intel announced that it might lay off staff as a part of a plan to chop $10 billion in spending. Nvidia announced a hiring slowdown over the summer, and Qualcomm announced its hiring freeze in November.

Nevertheless it’s not only semiconductor firms adjusting after two pandemic-fueled years of growth and provide issues. Tech firms including Meta, Twitter, Snap, Stripe and Tesla have also cut staff as firms gird for a possible recession and better rates of interest.

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