What’s Going On Here?Micron posted shrinking stats in its quarterly results earlier this week. What Does This Mean?It’s hard to justify the latest tech upgrade when your household bills are pricey enough to rival a brand-new PlayStation 5. But when shoppers cut back on not-so-little luxuries like smartphones and PCs, it affects businesses all through the supply chain. Just look at Micron: the biggest US memory chipmaker could barely keep up with out-of-control demand last year, but those consumer cutbacks helped to almost halve its sales last quarter from the same time the year before. The firm even notched a quarterly loss four times bigger than already pessimistic analysts expected, so it’s pulling out all the stops to make the books better next year. Micron cut production by roughly 20% a few months back, and is now planning to trim its manufacturing investment further, cut its workforce by 10%, and squash any bonuses. Talk about festive joy. Why Should I Care?For markets: Alexa, play “Irreplaceable” by Beyoncé.
Micron has a problem: its chips are made to a set standard, meaning they can be easily switched with competitors’ products. So the firm will end up in trouble if its biggest rivals – including Samsung Electronics and SK Hynix – don’t follow its production-cutting lead to help bring the glut of chips across the industry in check. And if you think being replaceable sounds like a recipe for disaster, you might be right: that could well be why Micron’s shares have underperformed a key index of some of the world’s biggest chipmakers by around 12% this year.
The bigger picture: New year, no new jobs.
Micron does have some company in the firing room, mind you: Intel, Nvidia, and Qualcomm have all announced hiring freezes or layoffs of their own. Pair that with Big Tech’s recent workforce mega-cull, and the high likelihood that Western economies will face a recession next year, and the writing might be on the wall for 2023’s job market. | 