Stop recruitment and reduce salary! IC design factory starts to reduce costs

Source: Huaqiang Microelectronics Author: June

    Introduction: Recently, according to the latest information exposed in the industry, Howell Group, the image sensor manufacturer, issued an internal letter announcing cost control, with the goal of reducing costs by 20% by 2023! Coincidentally, Duntai has also recently made layoffs and salary cuts for senior executives due to high inventory.

    On December 21, it was reported that IC design factory Howei Group issued an internal letter announcing cost control, with the goal of reducing costs by 20% in 2023!

    Howell Group said, "The current market situation is very serious, we are facing great market challenges, and prices, inventory and supply chain are facing great pressure. Therefore, we must carry out cost control, with the goal of reducing costs by 20% in 2023."

    In order to achieve the goal of cost reduction, Howell Group announced that it will take a series of measures, including:

    1 Stop all recruitment and leave without replacement; Salary reduction of senior executives; All regions of the Group will be shut down during the Spring Festival; Stop paying quarterly bonuses and other bonuses in any form; Strictly control expenditure; Some R&D projects will also reduce NRE expenditure.

    Howell Group said, "These measures are temporary, and we believe that the improvement of the business level will occur in the second half of next year, because we have a new product layout in the consumer market, while the automobile and emerging markets are rising steadily. We will reassess the situation at the end of the first quarter of next year."

    1 It is believed that as the world‘s third largest COMS image sensor manufacturer after Sony and Samsung LSI, Howell Group (with a global image sensor market share of 13% in 2021) seems to be far more affected in the process of consumer electronics market adjustment than Sony and Samsung LSI. Because Sony‘s main market is the middle and high-end market, which is relatively less affected. Samsung has its own mobile phone business, which can help Samsung LSI to make market forecast in advance to a certain extent, and also help to digest inventory.

    Under the background of "great pressure on price, inventory and supply chain", Howell Group is not surprised to launch cost control measures this time. Although measures such as stopping recruitment, reducing senior executives‘ salaries, stopping bonuses, and reducing some R&D expenditures have been taken, at least no layoffs have occurred.

    Coincidentally, Duntai has also recently made layoffs and salary cuts for senior executives due to high inventory. Hu Zhengda, chairman of Duntai IC Design Factory, disclosed that the company is carrying out an internal personnel compact plan, including about 10% to 13% of the lean manpower to eliminate the weak and retain the strong. Because the company is in a loss, all middle and senior executives have reduced their salaries. Duntai made a huge profit of NT $6.1 billion last year to lose money this year, which is also the first IC design factory to announce layoffs and salary cuts in this wave of industrial downturn.

    It is reported that Duntai recognized a total of NT $2.497 billion in inventory falling price and sluggish loss in the third quarter, with a large loss of 13.57 yuan per share. Hu Zhengda said that at present, the market demand for terminal applications has not recovered significantly. Although the worst point has passed, the market situation is still unclear. It is estimated that it will take 9 months to 1 year to adjust Duntai‘s inventory level to return to normal.

    1. Duntai‘s revenue in the third quarter was NT $2.37 billion, down 28.8% quarter on quarter and 62.2% year on year; After tax net loss was NT $2.77 billion, a quarterly decrease of 3437.3% and an annual decrease of 251.6%.

    It is worth mentioning that recently, it was rumored that Xiaomi would cut 6000 employees violently. For this reason, insiders of Xiaomi said that there was indeed a layoff at the end of the year, but the number of layoffs reported by the media is wrong, which is far from such a large scale in fact. The data and untrue information came from an anonymous rumor on the Pulse platform, and the company has begun to take legal procedures after obtaining evidence. The insider also said that the layoff process was legal and compliant. The compensation policy is N+2, and the unfinished legal annual leave is converted by double amount.

    1 The news revealed that Xiaomi‘s mobile phone department, Internet department and other departments were involved in this layoff, but the layoffs were different among departments. Among them, the proportion of layoffs in individual departments in China is as high as 75%, and the Internet Department also has 40% of team layoffs. The overall strength of this round of layoffs is not yet clear, which is estimated to be 15%.

    1 According to the data disclosed in Xiaomi‘s financial report in the third quarter of 2022, as of September 30, 2022, Xiaomi has 35314 full-time employees, including 32609 employees in Chinese Mainland.