Micron is cutting jobs due to slow sales, US-China trade war

Micron layoffs
Image: Quentin Sokolow / The Burn-In

Micron Technology, Inc. has generated $13.7 billion in revenue in the first half of 2019, but the company is currently in the process of reducing its workforce. On Saturday, the Idaho Press reported the Boise, Idaho-based semiconductor manufacturer has quietly been cutting jobs at its flagship facility.

While the plant once employed 11,000 workers, its current staff is reportedly less than 7,000. Furthermore, the corporation is likely planning on making more job cuts.

Industry Downturn Leads to Job Cuts

As with the rest of the sector, Micron has felt the impact of the current global downturn in the semiconductor industry. Last month, The Burn-In reported the electronic components segment hit a ten year low in Q1 2019. To endure these market conditions, the firm initiated a wave of redundancies in January.

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The Idaho Press reports the corporation’s Boise facility employed between 6,000 and 6,999 workers last October. Since then, the plant has closed down its entire assembly section and significantly reduced staff in other departments. The publication also notes the company’s remaining team members are anxious about keeping their jobs.

Despite being one of the major employers in Idaho’s Treasure Valley, the company hasn’t publicly disclosed its workforce cuts. Micron may have avoided making federally mandated mass layoff disclosures because it’s reducing its staff in increments. The firm recently instituted an employee review program that has resulted in a slew of terminations.

A Micron representative admitted the company had been making staffing cutbacks at the Boise facility but didn’t talk numbers.

The Huawei Factor

One reason Micron might be reticent to disclose its layoffs is that it’s taking a wait-and-see approach to the U.S.-China trade war. Before the conflict began, the company derived 13 percent of its revenue from selling chips to Huawei. However, the Trump Administration’s Sino sanctions likely affected the profitability of the company’s exports.

Furthermore, the U.S. Department of Commerce prohibited U.S. companies from doing business with Huawei in May. Unless it secured an undeclared exemption from the government, Micron had to suspend its relationship with the conglomerate. Having lost an eighth of its income, the firm is unlikely to hit its Q3 2019 projections.

As the semiconductor manufacturer experienced a 49 percent decline in year-to-year net profits in Q2 2019, Micron doesn’t want to further the perception that it’s struggling. But as the trade war shows no sign of ending soon, the firm’s position will get worse before it gets better. Accordingly, government regulators and shareholders might demand accountability for its lack of transparency.