The strongest wave of layoffs is coming, affecting many LED companies

Since 2015, economic growth has slowed down and market volatility has intensified. In such an environment, a new wave of layoffs has set off around the world. Many Fortune 500 companies have launched layoffs on a global scale. HP, ConocoPhillips, Bloomberg, and Standard Chartered Bank have all listed their own layoff plans. It can be said that layoffs are spread across all walks of life. Of course, the LED industry is not immune.

Many companies announced layoffs

In the second half of the year, the LED industry quietly set off a wave of "small-scale" layoffs. At the end of August, there were rumors in the industry that Lite-On was laying off relevant departments, affecting as many as 100 employees. However, CEO Chen Guangzhong denied it, emphasizing that it was a manpower adjustment to focus on the new blue ocean. It was only the LED lighting application department and the indoor lighting brand, with a total of 120 people on both sides of the Taiwan Strait. Most employees were transferred to the optoelectronics department, and those who did not want to be transferred were given preferential treatment.

At the same time, it was reported on September 1 that GTAT, the former Apple sapphire supplier, plans to lay off employees in the company. The number of employees planned to be laid off this time accounts for 40% of the total number of employees. However, as early as last October, GTAT had already laid off nearly 1,000 employees when it filed for bankruptcy in court. It also closed its Mesa, Arizona sapphire manufacturing plant that cooperated with Apple, and the number of layoffs at the plant reached 727.

In addition, it was reported on September 14 that Epistar, a major Taiwanese LED chip manufacturer, laid off 65 employees on September 17. On the 17th, it was also reported that Epistar's Zhuke Factory is expected to lay off 76 employees in three batches. In addition, Epistar Group's Canyuan Optoelectronics Longtan Factory and Pingzhen Factory have also laid off a total of 39 employees simultaneously. In total, Jingdian Group has laid off 180 people, accounting for about 3% of its total employees.

However, Jingdian Vice President Zhang Shixian does not seem to agree with this statement. He said that Epistar has gone through many mergers and had to carry out small-scale layoffs in order to quickly respond to changes in production, sales and customer needs. However, the layoffs were not to reduce costs, but to improve the efficiency of Epistar's operations.

According to the financial report information released by Epistar, the revenue in the second quarter of this year was approximately NT$6.77 billion (the same below, equivalent to approximately RMB 1.33 billion), a quarterly decrease of 2%, and an annual decrease of 18%. The operating loss was 323 million yuan (equivalent to approximately RMB 63.44 million). The industry turned a loss, which was the first after-tax loss in the past five quarters since the second quarter of 2014. The company's cumulative revenue in the first eight months was approximately 17.446 billion yuan (equivalent to approximately 3.426 billion yuan), a year-on-year decrease of 11.57%.

Although the second quarter financial report is quite weak, Epistar is still confident about next year, believing that it still has a competitive advantage and next year will be better than this year.

According to foreign media reports, GTAT’s current round of layoffs is to successfully complete its reorganization under the protection of Chapter 11 of the U.S. Bankruptcy Code and further reduce the company’s financial expenditures. A GTAT spokesperson told the media that this layoff plan will help GTAT save nearly $20 million per year in the future. According to estimates by GTAT bondholders, the funds required for restructuring will be at least US$95 million. By then, the company will return to the field of solar energy and industrial equipment.

It should be noted that although GT has filed for bankruptcy and the company's stocks have been "delisted" from the Nasdaq trading center, daily operations are still continuing, but it is no longer engaged in the sapphire production business.

Different voices about layoffs

As the global economic shock intensifies, almost every two days, we will see news of layoffs from some companies. According to statistics, 115 of the "Fortune 500" companies this year have formulated layoff plans, of which as many as 62 are in the United States, becoming the "hardest hit area." Faced with such a cold economy, layoffs seem to be the most direct way to reduce costs. However, different people do have different attitudes towards whether to lay off employees.

Faced with declining performance and increasingly fierce market competition, layoffs do have the effect of immediately reducing burdens, and have been adopted by most companies. In fact, for many companies, layoffs are a last resort because the company cannot take care of so many employees and can only reduce costs and preserve survival strength. Some people also believe that entrepreneurs should always maintain a sense of urgency, and what needs to be remembered is that the survival of an enterprise is the first priority at all times, and talking about development without survival is nonsense.

Previous comments have stated that in the context of the global economic downturn, for companies, layoffs may be an option to reduce costs and survive the cold winter, but if not handled properly, it may trigger endless crises. Scars will be left on both the business and the employees. Some investors have also said frankly that when companies face many pressures, they should give priority to the interests of employees and society, and should assume more social responsibilities when dealing with crises, rather than purely making money or profit.

In such a situation, if you were a business operator, what choice would you make?

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