SAN FRANCISCO (BLOOMBERG) - Micron Technology plans to slow hiring as it copes with a sudden drop in chip demand, but the company joined peers such as Intel and Nvidia in deciding that major job cuts are not yet necessary.
The maker of memory chips has no plans to reduce headcount and will not be making large-scale layoffs, according to a person familiar with the situation.
The assurances come at a time when Micron is cutting its forecast and dealing with a build-up of inventory. The company said earlier on Tuesday (Aug 9) that fourth-quarter sales are expected to be at the low end of or below its previous guidance.
As of October last year, Micron employed about 8,600 employees in Singapore, where some of its most advanced memory chips are made.
In a typical downturn, chip companies have relied on layoffs to cope with sluggish results. But the industry just lobbied for passage of the Chips and Science Act, a landmark federal Bill that will pump US$52 billion (S$71.7 billion) into domestic semiconductor production. That has made it especially difficult for chip companies to be seen cutting jobs.
Intel assured employees at an all-hands meeting last week that it would not be eliminating positions across the company. Nvidia made similar assurances this week after warning that revenue was more than US$1 billion short of what it expected last quarter.
In an internal memo, Nvidia chief executive officer Jensen Huang said the company would steer clear of cuts and even give out raises to help employees deal with inflation. He said he remains confident of the opportunities for the chipmaker's technology, according to the memo.
Holding onto workers, particularly engineers, could signal that chip executives are still confident about the industry's growth prospects. The current slump is seen as an "inventory correction" - a slowdown caused by customers working through their inventory - rather than a more fundamental problem.
But analysts are not optimistic.
"We continue to believe we are entering the worst semiconductor downturn in at least a decade, and possibly since 2001," Mr Christopher Danely, a Citigroup analyst, said in a report on Tuesday. He expects "every end market to experience a correction".