A wave of job cuts is crashing into the tech sectorA wave of job cuts is crashing into the tech sector

Elon Musk bought Twitter for the good of humanity, said the world's richest man not long before scrapping thousands of roles for humans at the sinking social media platform. If mainstream press reports are correct, about half of Twitter's employees have been released into the technology wild. They are likely to form a tiny percentage of those losing technology jobs this year and next.

Twitter employed only 7,500 people last December, after adding about 2,000 to the payroll in 2021. Alongside Big Tech companies and veterans of Silicon Valley, it is a tiny bird that makes a shrill noise, garnering attention as an online megaphone for celebrities and egotists and – more recently – because of Musk's takeover. Since 2015, Apple alone has recruited enough people to staff seven Twitters, if it so desired.

Figure 1: Moneybags Elon Musk is said to have cut thousands of jobs at Twitter.
(Source: Kristoffer Tripplaar/Alamy Stock Photo)

The iPhone maker is one of numerous technology companies that have been on a hiring spree for several years. As telecom operators have cut thousands of jobs, so their American suppliers and other US technology firms have been adding them. A random list comprising Big Tech players, chipmakers, traditional IT companies and telecom equipment vendors – all with US headquarters – has gained more than 210,000 employees since 2018 (see US companies besides Amazon in table below), despite cutbacks at several organizations. Include the country-sized Amazon and the increase since then is more than 1 million.

This looks set to go into reverse as fears mount of a worldwide recession next year. With inflation and interest rates on the march, company and household budgets are being squeezed. A unique set of geopolitical circumstances now grips the US semiconductor industry, which is being cut off from China, one of its biggest markets, just as Joe Biden's controversial CHIPS Act pumps $39 billion of government money into semiconductor production. Even before this egregious handout, experts had warned of a looming components glut. As prices fall and stock remains unsold, chipmakers are in for a belt-tightening 2023.

Wielding the axe

Blaming the "worsening economic conditions," Intel has already told investors it is looking for about $3 billion in cost savings next year. By the end of 2025, it aims to slash expenses by as much as $10 billion. This is a huge figure, equal to about 17% of Intel's overall sales and operating costs last year. The update came as Intel reported a 20% drop in sales for its recent third quarter and a massive 85% slump in net profit.

Intel's last big round of layoffs came in 2016 and 2017, when 4,600 jobs disappeared. Since then, it has added 18,400, finishing last year with about 121,100 employees. Outside the all-important research-and-development unit, where spending soared nearly a fifth last year, the outlook for staff is suddenly worrying.

2016 2017 2018 2019 2020 2021 Amazon 341,400 566,000 647,500 798,000 1,298,000 1,608,000 AMD 8,200 8,900 10,100 11,400 12,600 15,500 Apple 116,000 123,000 132,000 137,000 147,000 154,000 Broadcom N/A N/A 15,000 19,000 21,000 20,000 Ciena 5,555 5,737 6,013 6,383 7,032 7,241 Cisco 73,700 72,900 74,200 75,900 79,500 83,300 Corning 40,700 46,200 51,500 49,500 50,110 61,200 Dell 138,000 145,000 157,000 165,000 158,000 133,000 -VMware 20,000 22,000 24,000 31,000 34,000 N/A Ericsson 111,464 100,735 95,359 99,417 100,824 101,322 Facebook 17,048 25,105 35,587 44,942 58,604 71,970 Google 72,053 80,110 98,771 118,899 135,301 156,500 HPE N/A 66,000 60,000 61,600 59,400 60,400 Huawei 180,000 180,000 188,000 194,000 196,600 195,000 IBM 380,300 366,600 350,600 352,600 345,900 282,100 Intel 106,000 102,700 107,400 110,800 110,600 121,100 Juniper Networks 9,832 9,381 9,283 9,419 9,950 10,191 Marvell 4,617 3,749 5,275 5,633 5,340 6,729 Microsoft 124,000 131,000 144,000 163,000 181,000 221,000 Motorola Solutions 14,000 15,000 16,000 17,000 18,000 18,700 Netflix 4,700 5,500 7,100 8,600 9,400 11,300 Nokia 102,687 101,731 103,083 98,322 92,039 87,927 Nvidia 10,299 11,528 13,277 13,775 18,975 22,473 Qualcomm 30,500 33,800 35,400 37,000 45,000 51,000 Twitter 3,583 3,372 3,920 4,900 5,500 7,500 VMware N/A N/A N/A N/A N/A 37,500 ZTE 81,468 74,773 68,240 70,066 73,709 72,584 (Source: companies, SEC filings)
(Notes: The fiscal year ended before December for several companies in this list; VMware was spun out of Dell in November 2021; Apple had 164,000 employees at the end of its last fiscal year in September)

Big Tech is either freezing recruitment or cutting jobs, too. Metaverse-obsessed Facebook spent $9.2 billion on research and development in the recent third quarter, a year-on-year increase of about 45%, in a desperate bid to cultivate a future business alternative to its ailing social media empire. As advertisers decamped, revenues fell 4%, year-on-year, to $27.7 billion, and net profit tumbled 52%, to roughly $4.4 billion.

After gaining another 13,366 employees last year, hiring 11,583 in the first six months of 2022 and reportedly adding about 3,500 since then, Facebook is now slamming the brakes on recruitment. Headcount in 2023 will be "roughly flat with current levels," said Dave Wehner, Facebook's chief financial officer, but press reports this week said large-scale layoffs were in the works. Want to know more about 5G? Check out our dedicated 5G content channel here on Light Reading. Similar messages of recruitment slowdown or layoffs have come from Amazon, Google and Microsoft, the giants of the public cloud. Given the size of its workforce, there is particular concern about Amazon, which would be unprofitable without AWS, its public-cloud business. Minus AWS, Amazon racked up a loss of $8.1 billion on sales of more than $306 billion for the first nine months of this year. Any disruption in the public-cloud market could therefore have nasty ramifications for Amazon's other ventures and the hundreds of thousands of people who staff them. And workforce pruning already appears to have started at the biggest of Big Tech by employee numbers. Headcount had dropped from more than 1.6 million at the end of 2021 to about 1.5 million in September, according to mainstream press reports. No safe haven
Smaller companies like Twitter, though, have made the deepest cuts so far. Lyft, a ride-hailing app that competes against Uber, last week said it would lay off nearly 13% of its workforce, or nearly 700 employees. In September, Snap revealed plans to cut its headcount by a fifth. Based on last year's numbers, that would equate to about 1,300 redundancies. Twitter is conceivably doomed under Elon Musk's ownership. Cuts, he said, were prompted by dwindling revenues. Sales had already dipped 1% for the recent third quarter, to less than $1.18 billion, when Twitter also recorded a $270 million net loss. Various high-profile advertisers have reportedly quit the platform since Musk took charge. Whatever the public thinks of his free-speech mission, big brands seem to have been scared off by the rhetoric. The right to cause offense is not easily marketable. Workforce shrinkage is a familiar trend for the telecom sector. AT&T and Verizon together have cut headcount by more than 138,000 employees since 2015 as they have sold underperforming assets and leant heavily on automation. Other telcos have been equally prepared to view some departments as an unnecessary cost burden. With technology companies doing likewise, the opportunities for a livelihood after telecom are drying up. Related posts: Musk says Twitter has the X factor after all Leading telcos in Europe and US have cut 292K jobs since 2015 Telenor takes step closer to zero-humans business Rakuten Mobile's hiring freeze is ominous Telco staff face crisis as cuts claim 127K jobs at big CSPs since 2015 — Iain Morris, International Editor, Light Reading