Jiwei Network Report (Text/Li Ying) A number of semiconductor giants are rarely "in step" - one after another on the road of layoffs.
In the recent wave of layoffs, including but not limited to Lam Research Group cut 1,300 jobs, Micron cut about 5,000 jobs, GF cut 800 jobs, Synopsys cut more than 100 jobs, Intel cut nearly 200 jobs, and Qualcomm will cut dozens of jobs in Israel after laying off more than 150 people. Not only design giants, but also equipment, EDA, manufacturing and other large manufacturers, so that the semiconductor industry in the downward cycle once again felt a chill.
In relative terms, Lam Research announced the layoffs of about 1,300 people, or about 7% of its employees; GF is about 5%; Intel has a very low percentage of employees due to its large base; Micron was the most "aggressive", with a layoff rate of up to 10%. Although in the previous months, Arm decided to cut 18% of its global workforce and Arm cut its UK employees by 20%, the impact of Micron's layoffs may be more drastic given the employee base.
Under the influence of geopolitics, the new crown epidemic and the global economic downturn, the semiconductor industry chain and its ecology have also entered a downward cycle. The layoffs of these companies are either cutting capital expenditures or adjusting for business, but the layoffs "winter" are undoubtedly an "intuitive" projection of the downturn of the semiconductor industry. Industry insiders pointed out that this reflects the cyclical fluctuations of the semiconductor industry, which is an inescapable law, basically every few years will experience a wave of "roller coaster", but this time the volatility caused by the interweaving of multiple factors is far more intense than before.
Memory and driver IC manufacturers are heavily impacted
Under this round of impact, the consumer electronics industry has suffered a lot of heavy losses, and the corresponding memory or driver IC manufacturers are under increasing pressure, and layoffs have to be "ruthless".
Due to the collapse of memory prices, Micron's recent revenue has been directly "cut", and it has to announce a combination of voluntary attrition and layoffs to reduce the number of employees by about 10% in 2023.
As the largest memory manufacturer in the United States, Micron has about 48,000 employees worldwide, and a 10% layoff means about 5,000 people will be affected, while Micron will also suspend bonus payments in 2023 to further cut costs.
In order to stop the loss, Micron will also slash capital spending in 2023, from the original plan of $12 billion to $7.5 billion, a cut of nearly 40%, which will significantly reduce production optimization inventory, and some are expected to have an effect in the first half of 2023.
Although other memory manufacturers are not so powerful, they are actually struggling to support. According to Korean media TheElec, SK Hynix is significantly reducing the size of the team, the company has set a quota for the number of leaders of each department, and the overall number of heads has decreased by nearly two or three percent.
On the other hand, memory first, although Samsung Electronics' fourth-quarter revenue was $57.2 billion, down 8% year-on-year; Operating profit was US$3.5 billion, down 69% year-on-year, but Samsung Electronics will not go to layoffs in the short term due to business diversification and the path dependence of "counter-cyclical investment".
In the case of shrinking demand for consumer electronics, as a touch and driver integration IC (TDDI) manufacturer has also suffered a huge impact, Duntai recently announced that it will cut about 10% to 13% of employees, and mid-to-high-end executives have reduced salaries, the subsequent trend is still difficult to understand.
Design and manufacturing followed
As a design giant, I did not expect that this round of Intel and Qualcomm were also listed.
In Intel's fourth quarter 2022 financial report, it achieved revenue of $14.04 billion, lower than market expectations and the lowest quarterly revenue since 2016. Under this bleak harvest, Intel's pace of layoffs is also accelerating. Not long ago, according to Intel's filing with the California Department of Employment, Intel is laying off nearly 200 jobs in California and expects more to come. It is reported that this is a further increase in the layoffs that began at the end of last year.
Previously, Intel has proposed that chip factory employees in Oregon and other places take 3 months of unpaid leave. In early December, Intel planned to furlough more than 2,000 employees in Ireland for three months without pay. It is reported that Intel plans to cut costs by $3 billion in 2023, and one of the cost-cutting measures includes layoffs.
Mobile phone chip manufacturer Qualcomm faced the impact of the sharp decline in the smartphone market, and had no choice but to lay off employees. Following Qualcomm's 153-person layoffs in San Diego late last year, there were reports that a new round of layoffs would be underway in Israel, cutting dozens of jobs. In contrast, the 12,500 employees in the world have been cut by nearly 2%.
As a manufacturing plant, it is inevitable to "empathize" with this cold wave. GlobalFoundries, the world's fourth and largest wafer foundry in the United States, announced it would cut nearly 800 jobs worldwide in December. That's about 5 percent. It should be noted that despite its third-quarter profit and revenue record highs, it still took layoffs, and it is clear that GF is not optimistic about the industry's prospects.
As TSMC is the largest OEM giant, it is naturally difficult to stand alone. Some analysts pointed out that TSMC is implementing a partial flexible work system, and the factor behind this is actually adjusting production capacity, indicating that the capacity utilization rate has declined, and there may be heavy news released in recent days.
Industry insiders also further revealed that Taiwan's logic chip foundry performed well in the first half of last year, but due to the further deterioration of the downstream market in the second half of last year, a small number of layoffs were exposed at the end of last year and in January this year, and further announcements may be made in February.
Semiconductor equipment manufacturer Lam also had to announce layoffs of about 1,300 people, equivalent to about 7 percent of its workforce, to reduce spending in a declining market as a direct result of manufacturing "slowing down production lines, delaying construction of new factories, and reducing improvements to existing facilities."
When will it pick up?
This wave of layoffs affecting all links of the industrial chain has also made the industry wonder: how long will it last?
On the other hand, as for mainland semiconductor companies, although there are fewer news of layoffs, the above-mentioned industry insiders pointed out that due to the overall market situation, some large domestic companies are focusing on shrinking expenses, and some large factories have suffered heavy losses due to the impact of the ban, and their businesses have suffered heavy losses. Some start-ups may be cold or difficult to roll out, and may be the first to fall in this round of cold wave.
Some industry experts told Jiwei that China's semiconductor industry has its own particularities, which are not the same as international rules, because the domestic semiconductor industry is not completely market-oriented, and under the pressure of the United States and allies, it is necessary to develop strongly, and it is necessary to complement each other and continuously enhance the resilience of the mainland semiconductor industry.
It has to be said that the industry is still at the trough of the market, and the first half of 2023 is still not good.
The above experts analyzed that inventory digestion will take a while, from the trend point of view, it is possible to pick up in the third quarter of 2023, and the industry will recover. Some applications such as data centers, automotive electronics, industrial Internet of Things, etc. are performing strongly, and Continental spares no effort to accelerate the expansion of mature process production capacity, which will promote related equipment and materials.
Micron's CEO has judged that the current supply-demand imbalance is the worst in 13 years, but inventories should peak at present, return to normal by mid-2023, and improve revenue in the second half of the year.
"Survival" is one of the "goals" of many semiconductor manufacturers in the first half of this year.