US Chip Designer Marvell to Begin Layoffs in China

According to a report from China Semiconductor Forum, Marvell, a US-based chip designer, has decided to dissolve all of its Chinese research and development (R&D) teams. While Marvell has not yet made an official announcement about this layoff decision, employees in China have reportedly been informed of the decision.

According to a report by Ijiwei, a person familiar with the matter said that the layoff plan in China is a significant part of Marvell’s global layoffs. The company plans to eliminate approximately 15% of its worldwide R&D workforce in the near future, which amounts to around 1,000 employees. Only about 5% of these job cuts are expected to be in the US, with the majority being in China.

Marvell had already undergone significant layoffs in China in October of last year, citing “global business and organizational restructuring” as the reason. The layoffs impacted two of Marvell’s subsidiaries in China, Marvell Electronic Technology (Shanghai) Co., Ltd. and Marvell Electronic Technology (Chengdu) Co., Ltd. The SPG department, PHY department, Design Verification team, and Engineering team of Marvell Shanghai, as well as the SPG department of Marvell Chengdu, were affected. Some of the core Chinese employees were given advance notice and the opportunity to transfer to Marvell Singapore and Marvell US.

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Founded in 1995, Marvell is headquartered in Silicon Valley and employs nearly 6,000 people worldwide. It has international R&D centers in the US, Europe, Israel, Singapore, and China.

US sanctions and trade tensions have impacted many US semiconductor companies to varying degrees in China. In addition to Marvell, other companies, including Micron Technology, Texas Instruments, and Lam Research, also laid off employees in China last year.

According to sources close to Marvell as reported by Ijiwei, Marvell is somewhat different from other global companies in China in that it has R&D teams involved in high-end product development. This makes the company more vulnerable to the impact of US sanctions. The source commented, “The design team at Marvell is responsible for creating high-end chips that are profitable, but this part of the company’s operations has been forced to terminate due to the US sanctions. The Marvell management team may believe that it is becoming increasingly difficult to carry out R&D activities in China.”

Marvell announced its fiscal year 2023 net revenue results in March of this year, stating that its net revenue reached a record $5.92 billion as of January 28. Of this revenue, 42% came from the Chinese market. While Marvell emphasized that most of the chips shipped to the region were related to sales to non-Chinese customers with factories or contract manufacturing businesses in China, the company’s reliance on the Chinese market is still significant.

Marvell is concerned about the increasing number of Chinese companies that have been added to the US Entity List, which imposes export restrictions on the companies. This has resulted in suppressed demand for Marvell chips and has exacerbated the already challenging macroeconomic environment.