Thursday, February 2, 2023

Mass layoffs due to memory market crisis

The decline in consumer goods is causing a sharp decline in consumer electronics sales, which is severely impacting the DRAM and NAND flash memory markets. are the main producers Taking measures to stop over supplyis slowing down their expansion plans as they consume their inventory, but everything indicates that this crisis will continue for several more quarters, undermining the business of these brands in the medium term.

Most of them are presenting poor business results in their latest reports and this month manufacturer Micron announced it would be forced Lay off 10% of its employees in 2023, As he has believed, he will offer voluntary dismissals to some of his 48,000 workers and slash bonuses and executives’ salaries for the rest.

In an announcement made last week on North American television channel Boise KTVB, the company’s CEO Sanjay Mehrotra highlighted that a Sharp drop in memory product prices For computers in recent months. This will force layoffs that will affect its headquarters in North America, Europe and Asia, although it has not specified how the layoffs will be distributed.

The move marks a significant turnaround for one of the world’s leading memory makers, which just months ago announced major investments to expand its operations. In September, it said it would invest $15 billion this decade to build a new factory in Boise that would create 17,000 jobs.

Shortly after, he announced another project in New York that would require an investment of $100,000 million for a plant that would create 50,000 jobs. However, as announced by the CEO of the company, the restructuring plan that has just been announced There will be no impact on your expansion plansBecause these projects will be possible thanks to the support provided by the CHiPs Act and the Science Act of 2022, which will contribute a combined $280,000 million to strengthen the position of the United States industry compared to China and other producing countries.

Of this, 52,000 million will be specifically earmarked to boost the manufacturing of chips to meet demand from manufacturers of smartphones, computer equipment and automobiles. Micron makes DRAM and NAND flash memory for these customers, but demand has dropped sharply in recent months, and Mehrotra says the industry is hurting. Biggest mismatch between supply and demand in last 13 yearsin both DRAM and NAND flash chips, and says his company is forced to make significant cutbacks in its capex and wafer production in order to maintain its competitive position.

On the other hand, he expects demand for DRAM to grow again by 10% in 2023 and for NAND flash by 20%, creating new opportunities for growth for the brand. They expect the recovery of enterprise data center and cloud spending in 2023 to be lower than expected, which will make it difficult to reduce inventory and continue bring down prices, This situation will resolve in the long term, but in 2023 it will force the brand and perhaps other manufacturers to take measures to reduce capital expenditure and protect their margins.

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Nation World News Desk
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