US flash memory maker SanDisk is cutting 10% of its work force to remain profitable in response to being forced to make steep price cuts.
SanDisk said it will lay off about 250 employees beginning in early March but also cut salaries for top executives and freeze salaries for all other employees.
A 50% reduction in NAND flash memory component prices in the last two months forced SanDisk to cut prices at the retail level and to original equipment manufacturers (OEMs) by between 30% and 40% respectively, said Eli Harari, SanDisk chairman and chief executive.
"Although we believe there will be strong pickup in demand for our products in the second half of the year, we do not have visibility as to when the current aggressive pricing cycle will run its full course, and gross margins are likely to remain under significant pressure for several quarters," said Harari, who will himself be taking a 20% pay cut under the austerity plan.
The president of SanDisk and several executive vice presidents will be hit with 15% pay cuts and other vice presidents will get 10% reductions. There will also be a freeze on new hiring in many areas of the company.