US ban on China chip exports rebounds, causes 2,700 American job losses

[beijingwalker]

US ban on China chip exports rebounds, causes 2,700 American job losses​

California-based chipmaking kit-maker Lam hit by DRAM decline, inability to export to Middle Kingdom​

Tobias Mann
Fri 27 Jan 2023 // 00:54 UTC

The Biden administration's policy of restricting Chinese chip makers from accessing vital manufacturing equipment has caused damage at home, with California-based wafer fabrication equipment supplier Lam Research announcing it would layoff 1,300 employees, or about seven percent of its global workforce, as the company prepares for billions in lost revenues during the 2023 fiscal year.
Lam Research is one of just a handful of companies that sells equipment used in the production of semiconductors, particularly those used to manufacture NAND flash and DRAM memory.

Lam CEO Tim Archer announced the layoffs during the company's second-quarter 2023 earnings call Wednesday citing slowing wafer demand and the most recent bout of regulations banning exports of chipmaking equipment to China.

"As a result of macro-economic headwinds, recent trade restrictions limiting our ability to do business in China, and an anticipated decline in global wafer fabrication equipment spending in calendar year 2023, we are taking a range of actions across our business to manage costs," a company spokesperson told The Register in an email Thursday.

Approximately 30 percent of the company's revenues came from China in Q1, though that share shrank to 24 percent of revenues by Q2 and is expected decline even further by end of Q3 in March 2023. Lam expects to lose out as much as $2.5 billion, or about 13 percent of its FY 2022 revenues, in the new year as a direct result of the Biden administration's latest round of export bans, which went into effect in October.

A rapidly deteriorating NAND and DRAM memory market isn't helping — the manufacturing equipment for such silicon accounts for roughly 50 percent of Lam's annual revenues. In addition to laying off 1,300 full time workers, the company also plans to let go of 1,400 temporary workers over the next two quarters.

Archer styled 2023 as a year in which the company will realign with market demands.

"This coming year represents a reset in the market and in our business, but it's also an opportunity for us to make the changes needed to accelerate our strategic priorities," he said during the company's Q2 earnings call, according to a transcript. "I am confident that by taking the difficult actions we have announced today, we are putting Lam in a stronger position to capitalize when industry sending growth returns."

Lam's outlook was a stark contrast to an otherwise positive quarter for the equipment vendor. The company reports $1.47 billion in net income on $5.27 billion in revenue, which was up percent from the year prior.

A perfect storm​

Lam research isn't the only equipment unhappy about the Biden administration's policies. The Netherlands' ASML, which also produces equipment used in chipmaking, recently warned that a ban on exports to China could result in higher semiconductor prices.

"Chip availability could be reduced, could be as a result of export controls that go too far," CEO Peter Wennink recently told reporters, according to Bloomberg "It also means that we will have a less efficient infrastructure and cost will very likely go up."

Earlier this month, Biden met with Dutch Prime Minister Mark Rutte at the White House, where the US president pushed its ally to enact stronger restrictions on exports bound for China. While the US has been successful in blocking the export of extreme ultraviolet lithography machines to China, the Biden administration hopes to expand restrictions to technologies like ASML's deep ultra violet lithography equipment.

Dutch government officials will meet with their US counterparts Friday to hash out stiffer export controls, Reuters reported late Wednesday.

In addition to the Netherlands, the Biden administration has leaned on allies, including Japan and South Korea, to further restrict China's access to advanced semiconductor technologies. The USA is also working with Canada and Mexico to establish a regional semiconductor supply chain.

Chipmakers and equipment vendors are also facing broader economic headwinds as semiconductor demand dries up. A recent TrendForce report predicted that global wafer demand will decline four percent in 2023. ®

US ban on China chip exports causes stateside job losses

California-based chipmaking kit-maker Lam hit by DRAM decline, inability to export to Middle Kingdom

www.theregister.com

 

[Hamartia Antidote]

Before Covid caused the chip crunch Lam had 10,700 employees. During the chip shortage craze they raised the count to 17,700. An insane increase.

Now they are going back down.

Lam Research to trim 7% of workforce, increase R&D spending as memory-chip crunch hits outlook

Lam Research declined in the extended session Wednesday for the silicon-foundry equipment supplier

www.marketwatch.com

Lam Research to trim 7% of workforce, increase R&D spending as memory-chip crunch hits outlook​

Lam Research Corp. shares declined in the extended session Wednesday after the silicon-foundry equipment supplier said it will cut its workforce by 7%, while increasing the portion it spends on R&D, as a big drop in memory-chip demand sours its outlook.

Lam Research LRCX, +1.91% shares declined as much as 4% after hours, following a 0.2% decline to close the regular session at $488.40.

The Fremont, Calif., company said it plans to reduce its global workforce by 1,300 employees by the end of March, which does not include a separate 700-person reduction to its “temporary workforce” who were let go at the end of December.

The layoffs come following a big personnel buildup during the COVID-19 pandemic. Lam reported having 17,700 employees this past August, a 65% increase from the 10,700 positions it reported in August 2019.
Layoffs are only one of the cost cuts Lam is making, Chief Financial Officer Doug Bettinger said on the call with analysts. One segment at Lam will not get cut, however, and that’s R&D. Bettinger said the company expects that R&D as a percentage of operating expenses in 2023 will increase compared to 2022.
The cuts come as Lam expects fiscal third-quarter adjusted earnings to come in between $5.75 and $7.25 a share on sales of $3.5 billion to $4.1 billion, while analysts surveyed by FactSet, on average, are projecting earnings of $7.78 a share on revenue of $4.35 billion.

Even with record earnings and revenue in 2002 amid supply-chain difficulties, a drop in spending is forcing the company to take proactive measures, said Tim Archer, Lam’s chief executive.

Lam makes the very complicated machinery used by foundries like Taiwan Semiconductor Manufacturing Co. TSM, +1.13% to make the silicon for chips made by the likes of Nvidia Corp. NVDA, +2.48% and Apple Inc. AAPL, +1.48%, while chip makers like Intel Corp. INTC, +1.31% forge their own silicon.

“With these actions, Lam is focused on accelerating our strategic priorities to capitalize on the semiconductor industry’s long-term growth prospects,” Archer said. On Tuesday, Texas Instruments Inc. TXN, -0.54% announced it would forge ahead in building out its own capacity at a time when many others are cutting back amid a chip downturn.

 

[beijingwalker]

Before Covid caused the chip crunch Lam had 10,700 employees. During the chip shortage craze they raised the count to 17,700. An insane increase.

Now they are going back down.

Will continue " back down" further and further, they are losing over one third of their market.