Micron Technology can't hold on
American chips can be seen everywhere in the market. Smartphones are Qualcomm's Snapdragon processors, computers are Intel Core CPUs, and Nvidia's CPU products occupy an absolute monopoly. It can be said that the chip sold by American companies provides high-quality solutions for the global market, and consumers will naturally choose the product if it is good.
Enterprises get returns in revenue and sales, consumers get the products they want, and both parties can achieve a win-win situation.
But now it is not so easy for US companies to sell chips to customers. For well-known reasons, some advanced chips must obtain a license if they want to be shipped, but whether they can obtain the license is another matter.
This will lead to a reduction in sales channels for US companies, and naturally there will be less revenue.
Take the American memory chip giant Micron Technology as an example. The company announced its first quarter results for fiscal year 2023. Data shows that Micron's revenue in the quarter was US$4.09 billion, down 46.8% from US$7.69 billion in the same period last year, and fell 38.4% compared to .
Overall, Micron Technology’s financial report is not eye-catching, and can even be said to be very poor. In fact, it is not difficult to understand that consumers have reduced product purchase demand, so Micron Technology's memory chip shipments have dropped sharply. And if this trend continues, Micron Technology will not be able to return to normal operating conditions in the short term.
Finally, Micron Technology could no longer hold on and began layoffs. According to Micron Technology's official announcement, 10% of global layoffs will begin in 2023. It is expected that 4,800 employees will be laid off, and bonuses will be stopped at the same time.
After the layoffs, most of Micron Technology’s businesses will be reorganized. Of course, it’s unclear whether these moves will allow Micron Technology to resume normal operations. In fact, Micron Technology has already released a signal of layoffs before this. In November this year, it announced a reduction in capital expenditures and a reduction of 20% of the wafer production capacity of memory chips.
The layoffs are not exclusive to Micron Technology. Other US companies have also fallen into the layoff boom. For example, Intel plans to lay off thousands of employees, and has implemented unpaid leave for employees in European factories for several months, which is equivalent to letting employees resign in disguise.
and GlobalFoundries , HP , Seagate , etc. have also launched their own layoffs to reduce operating costs. Why do U.S. companies launch large-scale layoffs?
In the final analysis, it is market rules that prevent U.S. companies from doing business normally. There is no strong demand in the customer market. Mature chips can be made by oneself, but the high-end advanced chips they want cannot be bought.
American companies are unable to get the orders they have in front of them, so it is naturally impossible to obtain stable revenue. Without revenue, operations became difficult, which naturally triggered large-scale layoffs. And it is estimated that it will not be able to return to normal levels for a while. Companies can only find ways to extend the business cycle and reduce capital expenditures to carry out operations lightly.
Can American companies survive the technological winter?
Most U.S. companies are in a technological winter, and the rules are not targeted at the customer market. U.S. chip companies, including supply-side companies, are also subject to this. The customer market can try to make their own chips, but American chip suppliers may not be able to produce and sell them themselves.
Not all US companies can use chips in their own consumer electronics products like Apple , and then sell them directly to consumers. If most U.S. companies were also engaged in consumer electronics, not only would they not have much capital advantage, but they would also be under great pressure to restructure the market. It would be impossible to transform their businesses when they are laying off employees.
So the question now is, can U.S. companies survive the technological winter? This depends on when market rules return to globalization.
If US companies want to do business normally, the best way is free trade, selling chips to any customer who wants them, and allowing the market to accept these chip products. However, we have seen that the United States continues to modify its rules and regulations, making it impossible for most American companies to escape from the technological winter. The result of
continuing is not to achieve the goal you want, but that US companies get stuck deeper and deeper. Micron Technology's sharp decline in revenue and the start of layoffs are the best proof. It is expected that it will continue to cut capital expenditures in the future. Without capital expenditure, technological research and development may stagnate, resulting in a decline in technological strength and loss of advantages in the mainstream chip market.
If the United States does not want American companies to fall into a technological winter and be unable to escape, it should correct its approach to globalization instead of going its own way and doing meaningless things.
Summary
The chip industry is supported by global suppliers. The three major links of design, manufacturing, and packaging and testing form a complete chip industry chain . The United States wants to simultaneously control the strength of the industrial chain in the three major links, allowing foreign companies to build factories in the United States, making huge investments, and hindering the development trend of globalization. It can only be said that this is not the right choice, and it depends on whether the United States can wake up in time.
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