Seagate has announced that it will be looking into reducing a significant portion of its workforce in the next 12 months. The announcement came alongside the company’s second restructuring plan, which states that there will be a 14% reduction to its workforce. Combine this with the initial plan to cut 3% of its workforce (announced in late June) means that the company will be laying off about 8,100 employees come 2017.
Seagate’s plan to reduce its workforce will affect its employees who are operating in the Asian, American and EMEA (Europe, Middle East, and Africa) regions. According to sources, the decision to lay off a significant amount of its workforce will result in the company bearing costs of up to US$164 million (about RM650 million). Despite this, it is said that Seagate will be able to recover from the loss due to the lower operating costs as a result of letting go 14% of its employees.
The biggest factor contributing to Seagate’s decision is the shrinking TAM (total addressable market) for HDDs. According to its Q2 2016 financial reports, the company had merely sold 37 million HDDs, which is lower when compared to the 45.2 million HDDs it had sold in Q2 2015. In addition, the fact that SSDs are getting cheaper doesn’t seem to do any favours for Seagate either.
Seagate hasn’t specifically announced when it will begin the laying off process, but we do expect to begin in the coming months. The company also did not mention if there would be a reduction in its ability to manufacture HDDs in the coming months, although it seems to be very likely.