Home » Five major “tragedies” in 2022, Micron will lay off employees and cut expenses in the next year | Technology stocks | Micron Technology | Federal Reserve | Interest rate hikes | Semiconductors

Five major “tragedies” in 2022, Micron will lay off employees and cut expenses in the next year | Technology stocks | Micron Technology | Federal Reserve | Interest rate hikes | Semiconductors

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Five major “tragedies” in 2022, Micron will lay off employees and cut expenses in the next year | Technology stocks | Micron Technology | Federal Reserve | Interest rate hikes | Semiconductors

[Voice of Hope December 23, 2022](Comprehensive compilation by our reporter Li Yuan)As far as technology stocks are concerned, 2022 is a relatively bad year. All three major U.S. stock indexes fell, ranging from 10% to 30%. It is reported that Micron Technology (Micron Technology) will significantly reduce capital expenditure next year, and it is expected to lay off 5,000 people.

According to statistics from the China Credit Information Institute CRIF, the revenue in the first 11 months of this year showed a “three-decline” state, and the electronic components industry fell the most, followed by the semiconductor industry and other electronics industries. In addition, the financial insurance industry and the building materials construction industry both ranked in the top 5. These five major industries account for more than 40% of all listed companies, and their revenue decline trend is even more concerning.

“Barron” weekly pointed out that the entire technology stock market has fallen to the bottom. From the beginning of the year to date, the US Nasdaq Index fell 32.38%, the Dow Jones Industrial Average fell 10.02%, and the S&P 500 Index fell 19.68%.

The main reason is that the Federal Reserve continues to raise interest rates, resulting in increased interest payments on borrowings by US companies and tight working capital. This makes US companies maintain a conservative attitude towards operations and reduce capital expenditures. On the other hand, the U.S. banking system continues to raise interest rates, driving more market capital to flow back into the banking system, putting pressure on the stock prices of listed companies, making it difficult for U.S. listed companies to raise funds, and putting more pressure on the U.S. to enter an economic recession.

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The Fed recently indicated that it will not cut interest rates in 2023 even if it moderates the pace of rate hikes. CRIF believes that if the impact of each future rate hike starts to be reflected in the market after 3 months, it means that the rate hike will continue until the first half of next year, and its impact will be delayed until the end of next year. However, it is not ruled out that the U.S. recession will exceed market expectations during this period, which is also the biggest gray rhino next year.

Eric J. Savitz, editor of Barron’s technology industry, emphasized that “as long as the Fed continues to raise interest rates, technology stocks will continue to encounter headwinds.” He also analyzed that last week’s stock market crash also reflected that the market began to recognize The Fed’s strategy of continuing to raise interest rates until GDP growth turns negative.

The “Wall Street Journal” reported that recently, computer memory maker Micron Technology Inc. plans to lay off employees and cut expenses next year in response to further weakening demand for electronic products and wafers in the market. The company saw a sharp drop in sales during the quarter, posting a loss of $195 million.

Micron CEO Mehrotra (Sanjay Mehrotra) said the company will cut about 10% of its workforce to save money and will cut executive salaries for the remainder of the fiscal year.

He pointed out that the performance situation in the latest quarter has been extremely challenging. Falling prices for two main types of memory drove revenue down by nearly half to $4.09 billion.

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On a conference call with analysts, Melotra said the industry is in the throes of its worst supply-demand imbalance in 13 years and profitability will continue to be challenged next year.

Google executive and current founder of FPV Ventures, Wesley Chan (Wesley Chan) believes that “layoffs are just the beginning, the tip of the iceberg. Large and more careful companies will start to find that when interest rates start to rise, stock market funds also begin to flee. to “safe” assets such as bonds and T-bills.”

Editor in charge: Tang Jie

This article or program is edited and produced by Voice of Hope. Please indicate Voice of Hope and include the original title and link when reprinting.

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