(Bloomberg) -- Lam Research Corp., one of the three biggest providers of chip-manufacturing equipment in the US, is cutting about 7% of its workforce to reduce expenses in a declining market.

The company will eliminate about 1,300 jobs worldwide, Chief Executive Officer Tim Archer said on a conference call Wednesday. The overall market for chip equipment will sink to about $75 billion this year, down roughly $20 billion from the prior year, he predicted.

The announcement followed disappointing quarterly results from the Fremont, California-based company and a forecast that came in below analysts’ estimates. Its shares fell as much as 3.8% to $470.05 in late trading.

Lam said its chipmaker customers are slowing their production lines, postponing new plant construction and cutting back on improvements for existing facilities. The electronics companies that buy chips have amassed large stockpiles of unused components, and that’s rippling through the supply chain.

The biggest cuts are being made by memory chipmakers, particularly producers of Nand-style flash memory — major contributors to Lam’s sales. The company has also let 700 temporary workers go and will reduce its payroll by a similar number of temporary staff this quarter, Chief Financial Officer Doug Bettinger said. Overall, Lam expects charges associated with job cuts and facilities reduction of $150 million to $250 million. 

“This coming year represents a reset in the market and our business,” Archer said. “I’m confident by taking the difficult actions we’ve announced today we’re putting Lam in a stronger position.”

Lam executives also confirmed their prediction that 2023 revenue will be $2 billion to $2.5 billion lower because of US government restrictions on shipping chip technology to China. Those rules were introduced in October.

(Updates with cost of cuts, temporary worker reduction in fifth paragraph.)

©2023 Bloomberg L.P.