Micron, a major semiconductor maker based in the United States has announced that it is planning to cut its headcount in the year 2023.
The company announced on Wednesday that it is not going to have a good start for the year 2023. As per the officials, they will be removing a substantial number of their employers in the next year.
Micron to Cut Staff by 10%
The company has confirmed that in the year 2023, they have plans of cutting down on their staff. They will be cutting their staff by 10%.
As per the executives, the company is also facing a downtrend in its business and demand due to macroeconomic pressure.
They are not operating much of a profitable business so they had to make the difficult decision of releasing 10% of their workforce. They will start downsizing the next year.
For now, the company has not commented on the plans of rehiring or resuming its hiring process in the year 2023. This is a piece of alarming news for the employees that have been working for Micron for a long time.
The company has a huge workforce taking out 10% means that it will be downsizing by several thousand.
Following the announcement, the share prices for the semiconductor maker dipped more than 1% in the latest trading session.
Downsizing Followed by Bonus Suspension
At present, Micron, which is based in Idaho, has a total of 48,000 employees. This is what the company had revealed when it submitted its latest filing at the US SEC.
Therefore, cutting down the strength by 10% means that the company will be laying off 4,800 employees starting in the year 2023.
The company has confirmed that the downsizing will be carried out in two ways. It would either be voluntary departures for the employees or the company will proceed with downsizing.
In addition to the above, Micron has made another very alarming announcement pertaining to bonuses. The executives have made it clear that there would be no bonuses in the year 2023.
Given the current market situation where there is demand scarcity and not many orders are being processed, they are forced to suspend bonuses.
As communicated, the 43,200 left after the downsizing will not be receiving bonuses. The company has decided to suspend bonuses for the respective year.
Restructure Plan Announced by Micron
According to the documentation submitted by Micron at the US SEC on December 21, 2022, the company has confirmed they are going to implement a restructuring plan.
The purpose of the plan is to make changes to the business and operations in order to survive through harsh times. The company is facing a challenging time and it needs all the right resources to survive.
Therefore, they have decided to take the first yet most difficult step of laying off 10% of their headcount. They will proceed with personal reductions and voluntary attritions as the plan comes to force.
As per the officials, they are aiming to witness a charge of $30 million in the ongoing quarter as part of their business restructuring. They will also implement cost-cutting programs.
In addition to the above, they will be investing less money towards the manufacturing of capacity programs.
Not Good Enough Earnings from Fiscal First Quarter
Micron recently shared its earnings for the fiscal first quarter, which did not paint a good picture of the company’s performance.
The post showed that the company had faced a higher loss compared to the forecast. The analysts had predicted that the company’s loss would be $0.01 per share but they recorded a $0.04 loss.
As for the revenue, the company was able to generate $4.09 billion in the fiscal first quarter. However, the analysts had predicted that the minimum revenue the company may generate would be $4.11 billion.
Due to the downtrend and below-expectation earnings, the company has decided to cut costs. For this purpose, they have decided to cut their headcount by 4,800.