Cold wave is coming, semiconductor manufacturers are laying off employees

According to data from analytical institutions, in the third quarter of 2022, the revenue of the global chip market was 147 billion yuan, a decrease of 7% from the previous quarter. The semiconductor industry is heading for its biggest downturn since the dot-com bubble in 2000 and one of the biggest downturns in the history of chip manufacturing. In order to survive the long cold winter, semiconductor manufacturers have to reduce labor costs, and a layoff storm is sweeping across.

Micron: Revenue fell 46.8%, layoffs 10%, and stopped bonuses

Due to the decline in demand, the memory chip market, which was originally a bear market, will have an even more difficult time in 2022. The plummeting prices of memory and SSD have affected the performance of companies in the industry. Micron, a major US memory manufacturer, recently announced its Q1 quarterly results for fiscal year 2023 and announced Global layoffs of 10%.

As of December 1, Micron's revenue in the Q1 fiscal quarter of fiscal year 23 was US$4.09 billion, compared with US$6.64 billion in the previous quarter and US$7.69 billion in the same period last year.

In terms of profitability, Micron's net profit for the quarter was a loss of US$195 million, compared with a profit of US$2.306 billion in the same period last year, and a profit of US$1.492 billion in the previous quarter.

Micron CEO said that in the current market, the imbalance between supply and demand is the most serious in 13 years, but the inventory backlog should reach its peak now, and it will be healthier in mid-2023, and revenue will improve in the second half of the year.

Under such performance, Micron had to announce layoffs. It plans to reduce the number of employees by approximately 10% in the 2023 calendar year through a combination of voluntary reductions and layoffs. It is expected to incur at least US$30 million in expenses in the second quarter, most of which All are cash outlays.

Micron is the largest memory chip manufacturer in the United States, with approximately 48,000 employees worldwide. A 10% layoff means that approximately 5,000 people will be affected. Micron will also suspend bonus payments in 2023 to further reduce costs.

In addition, Micron will also significantly reduce capital expenditures in 2023. The original plan was to invest US$12 billion, but now it has been reduced to US$7-7.5 billion, a reduction of nearly 40%. It will significantly reduce the production of memory and flash memory chips. It is expected to be in the first half of 2023. will have an effect.

GlobalFoundries: Record high performance, layoffs 5%

GlobalFoundries, the fourth largest wafer foundry in the world and the largest in the United States, announced that it will lay off nearly 800 people worldwide in December. Preliminary financial results for the third fiscal quarter of 2022 as of September 30 were just announced in early November. Its 300mm equivalent wafer shipments were 637,000 pieces, an increase of 5% from the same period last year, setting a company record. In addition, the company's performance also set a new record, with revenue of $2.1 billion, an increase of 22%, net income of $336 million, and adjusted net income of $368 million. Profits and revenue hit new highs, but do we still need to lay off employees? Obviously, GlobalFoundries is not optimistic about the prospects of the industry.

GlobalFoundries has approximately 14,000 employees worldwide. According to GlobalFoundries CEO Tom Caulfield, he revealed at the meeting that the layoffs mainly involve non-manufacturing positions, including administrative-level employees. A statement from GlobalFoundries spokesperson Julie Moynehan confirmed the news. She said, “In a recent all-hands meeting, GF disclosed the cost-saving actions we are taking to respond to the current macroeconomic environment, including reducing corporate and manufacturing administrative costs and selective layoffs globally through the end of the year. Less than 800 employees.”

On November 11, GlobalFoundries announced that it had stopped recruiting and would soon start laying off employees to reduce costs by US$200 million (approximately 1.4 billion yuan), approximately 12% of its current costs. Spokesperson Moynehan said at the time that although GlobalFoundries believed the company's financial position was relatively strong this year, the company was striving to reduce costs given the "current environment."

Lam Group: The proportion of layoffs in China may exceed 10%, and the maximum compensation is N+6

At the beginning of this month, according to insiders of the semiconductor equipment giant Lam Research, Lam Research China began to lay off employees, and the layoffs have been going on for some time. Some employees may enter the scope of staff reduction after the payment of year-end bonuses.

It is reported that the proportion of layoffs in the first batch will exceed 10%, and the proportion of subsequent layoffs may further expand. Those who "voluntarily apply" to resign in the early stage can receive N+5 or N+6 compensation. When the compulsory layoff stage is reached, there will not be so much compensation.

According to the quarterly data released by Lam Group, in the 2021 natural year ending on December 26, 2021, Lam Group’s revenue was approximately US$16.524 billion. In terms of revenue source regions, revenue from mainland China also accounts for the highest proportion, reaching 33%, followed by South Korea with 26.8%, Taiwan, China with 15%, and the United States with 5.5%.

It is reported that Lam Group’s layoffs in China were mainly affected by the new U.S. regulations on China on October 7. This new regulation prevents Lam Group from continuing to sell to mainland Chinese manufacturers the semiconductor equipment and technology required to produce non-planar transistor logic chips below 14/16nm nodes, 3D NAND above 128 layers, and DRAM chips below 18nm process, unless Licensed by the U.S. Department of Commerce.

Intel: Hundreds of employees laid off, encouraged to take unpaid leave

According to the Wall Street Journal, hundreds of employees at Intel's California factory will be laid off next month, and Intel has also begun encouraging employees in its global manufacturing sector to take unpaid leave.

According to the report, Intel will lay off 111 employees in Folsom, California, and 90 employees in Santa Clara, California, where the chipmaker is based, according to a letter sent to the California Employment Development Department. The layoffs will be permanent and are expected to begin on January 31 next year.

Meanwhile, the company is also offering three months of unpaid leave to its factory workers in Oregon and elsewhere, according to recent media reports. Intel spokesman Adi Burr confirmed on the 6th that the company is providing voluntary furloughs to its global factories.

Previously, Intel reported that up to 2,000 employees in Ireland were put on unpaid leave for three months as part of Intel's cost-cutting plan.

Intel executives reportedly told employees, analysts and investors in late October that they planned to cut $3 billion in costs in 2023, as the company reported a year-over-year decline in fiscal third-quarter revenue and lowered its full-year outlook. . Cost-cutting measures include job cuts, but the number of cuts was not disclosed at the time. According to Intel's fiscal year report filed with the U.S. Securities and Exchange Commission, the company had 121,000 employees worldwide at the end of last year.

Marvell: Abolition of most of the R&D team in China, compensation N+3

In October this year, Marvell, a well-known American semiconductor chip design company, decided to conduct large-scale layoffs and withdraw from most of its R&D teams in China. Marvell explained the reason for the layoffs in China as "the company's global business and organizational structure adjustments." It also pointed out that the two subsidiaries of Maiweier Electronic Technology (Shanghai) Co., Ltd. ("Maweier Shanghai") and Maiweier Electronic Technology (Chengdu) Co., Ltd. ("Maweier Chengdu") located in China have decided to axe The SPG departments of Maiweier Shanghai and Maiweier Chengdu; the abolition of the PHY department of Maiweier Shanghai; the abolition of the Design Verification team of the ASIC department of Maiweier Shanghai; the abolition of the Engineering team of the IT department of Maiweier Shanghai, and the partial abolition of Infrastructure team, retaining some IT support staff; abolishing the GREWS department of Maiweier Chengdu, and abolishing some personnel of the GREWS department of Maiweier Shanghai.

In addition, another specific compensation plan for Marvell’s layoffs was circulated in the industry. The compensation plan was confirmed to be N+3, which is average monthly salary × (continuous working years + 3). The specific content is shown in the figure below.

According to Reuters, Marvell Vice President of Corporate Marketing Stacey Keegan responded in a written reply to Reuters that the move was as part of an adjustment in its global R&D investment and that the company would eliminate some positions in China.

Stacey Keegan said: "In China, we will focus our R&D investments on local customers and the Chinese market." "As part of this restructuring, several of our business units and functions are announcing changes to their global positioning strategies that will Resulting in the cancellation of the role in China.”

Arm: 20% of UK job cuts

In October, the Financial Times reported that Arm, the semiconductor IP subsidiary of SoftBank Group, had laid off 20% of its British employees, which violated the number of employees promised to the British government when SoftBank acquired Arm in 2016.

According to reports, Arm recently decided to lay off 18% of its global workforce, but it seems that most of the layoffs are British employees. The number of layoffs in other parts of the world is 550, while 700 employees were laid off in the United Kingdom. Previously, Arm had 3,500 employees in the UK, but after the layoffs, only about 2,800 employees remained.