Micron to Cut Workforce by 10% Next Year... Semiconductor Industry Faces 'Harsh Winds' Amid Economic Downturn

Micron CEO: "Semiconductor Supply-Demand Imbalance Worst in 13 Years"

[Asia Economy Reporter Kwon Haeyoung] Micron, which reported sluggish performance, will cut 10% of its workforce next year. As the global economic recession is expected to reduce semiconductor demand next year, a full-scale wave of layoffs has hit the semiconductor industry.

According to major foreign media on the 21st (local time), Sanjay Mehrotra, CEO of Micron, stated, "Next year's profitability will be sluggish throughout the year due to oversupply in the semiconductor industry."

Micron announced that its first-quarter (September to November) sales fell 47% year-on-year to $4.09 billion, delivering earnings shock-level results. The company also reaffirmed its plan to reduce production as inventory accumulates due to decreased semiconductor demand.

CEO Mehrotra said, "The semiconductor industry is experiencing the worst supply-demand imbalance in 13 years," adding, "Inventory has peaked and will decrease thereafter."

Just a year ago, the semiconductor industry faced supply chain instability as demand outpaced supply. However, this year, global inflation surges and interest rate hikes by major countries have rapidly cooled the economy, significantly reducing demand. Micron also announced last month that it would cut production by about 20% due to worsening market conditions.

Since semiconductors are a barometer of the global economy, Micron's decision to reduce its workforce is interpreted as a sign that the world economy is cooling rapidly. Concerns are growing that the vicious cycle of 'demand decrease → inventory increase → production cut → workforce reduction' will become entrenched.

International organizations have already lowered their global economic growth forecasts for next year. The International Monetary Fund (IMF) projected the global growth rate for next year at 2.7%, down 0.2 percentage points from the previous forecast of 2.9%. Earlier this month, IMF Managing Director Kristalina Georgieva even issued a pessimistic forecast that the global economic growth rate could fall below 2% next year.

This content was produced with the assistance of AI translation services.