New wave of layoffs at major companies: Tesla and Micron Technology plan to lay off 10% of employees

December 22, 2022  12:51

With the growing economic crisis, more and more large companies working in the field of modern technology are downsizing. Tesla and Micron Technology will soon join the list of such companies: both plan to cut 10% of employees in the near future.

Is Tesla in trouble?

Tesla, which produces electric cars, has frozen hiring of new employees. Moreover, a wave of layoffs is expected at the company, according to Electrek, citing an informed source.

The head of the company Elon Musk announced back in June this year that within 3 months the staff will be reduced by about 10%. Then the hiring of new employees was also suspended, but after some time it was restored as the company needed thousands of new employees for new plants in the USA and Germany.

How long the hiring ban will last this time is still unknown, especially since the company will need additional workers if it expands some of its production facilities.

When Musk bought Twitter, many Tesla investors were worried that he would abandon the electric car company and devote all his attention to the social network. It seems that their worries were not without reason: by November the company's shares dropped noticeably – down to $187.

Now, Tesla's share price has fallen even further, to a 52-week low: today, one share of the company is worth about $150, which is almost 50 percent less than a year ago.

Micron Technology ended the quarter with a loss

Micron Technology, known for its semiconductor products, also faced problems. According to its first fiscal quarter report, the company's revenue fell 47 percent to $4.09 billion, with losses of $195 million on a GAAP basis and $39 million on a non-GAAP basis. Operating losses reached $209 million and $65 million, respectively.

With no immediate improvement in the near term, the company plans to cut capital spending to $7 billion from the $8 billion it initially planned and $12 billion it spent in fiscal 2022, and cut its headcount of 48,000 employees by 10%. There are also plans to cut management salaries by 5-20% and stop paying bonuses. Spending on production equipment purchases is also planned to be more than halved.

One of the main reasons for the company's problems is the decline in demand for memory chips. From 2020 to early 2022, demand for them was growing, and the company built up an increased inventory. Now a combination of many unfavorable factors has led to a drop in demand for many of the products produced by the company.

The publication of the reports caused the company's stock price to decline by a couple of percent. And since the beginning of the year Micron's shares have fallen 45% in price.

Many large companies are downsizing

China's largest smartphone maker Xiaomi has recently begun cutting staff in its smartphone and Internet services departments. In order to optimize business, the company plans to cut 15% of its staff.

HP Inc. plans to cut 4,000 to 6,000 employees over the next three years.

Meta Platforms CEO Mark Zuckerberg is going to cut 11,000 people, about 13% of the corporation's workforce.

Amazon is also planning massive layoffs: about 10,000 employees will be laid off – that's about 3% of the company's full-time workforce and less than 1% of the global workforce.

The Twitter staff, which is headed by Elon Musk, has already been cut by nearly two-thirds. According to him, Twitter would have lost $3 billion if costs had not been cut.

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