Biggest AI-Driven Tech Layoffs 2024: Cisco, Intel, and Dell
Cisco is the latest tech giant to announce mass layoffs. Photo by Justin Sullivan / Getty Images.
Key Takeaways
- Cisco, Intel, and Dell have all announced major restructuring plans in recent weeks.
- The technology companies founded in the latter half of the 20th century are adjusting their business models for the AI Age.
- All three have invested heavily in securing their roles in the AI industry.
Following a similar move by Intel earlier in the month, on Wednesday, Aug. 14, Cisco Systems announced a major restructuring plan that will see the American technology conglomerate lay off 7% of its global workforce.
While periodic realignments are an inevitable part of any business cycle, in the case of Intel and Cisco, targeted layoffs are a direct response to the ongoing AI revolution.
Adjusting for the AI Age
Intel’s planned restructuring will target cost reductions of more than $10 billion in 2025 as the company struggles to remain competitive in a rapidly evolving semiconductor market.
Changes include a 15% headcount reduction equivalent to around 15,000 job losses as the company undergoes what CEO Pat Gelsinger called “the biggest restructuring of Intel since the memory microprocessor decision four decades ago.”
Specifically, Gelsinger is overseeing a strategic pivot the company has coined IDM 2.0, referring to Intel’s focus on Integrated Device Manufacturing (IDM), i.e. the process of designing and manufacturing semiconductors.
Since AMD quit the foundry business in 2012, Intel and Samsung are the only large IDM chip makers still operating. Of the two, only Intel competes with AMD in the market for high-capacity CPUs suitable for machine learning workloads.
Short-Term Pain for Long-Term Gain
IDM 2.0 chimes with surging demand for AI chips. Unlike AMD’s fabless approach, which outsources manufacturing to the Taiwan Semiconductor Manufacturing Company (TSMC) Intel controls the entire production process for its Xeon processors. However, the company is only halfway through a six-year plan to overhaul its fabrication processes.
In theory, this will be more profitable for Intel in the long run. But in order to invest in ramping up its manufacturing capacity, it has to make cuts elsewhere.
The $1 billion in planned savings from the latest restructuring pale in comparison with the costs already incurred by IDM 2.0.
A new facility, Fab 34, opened in Ireland last year and cost the company 17 billion euros . That’s just one part of Intel’s ambitious plans to transform its foundry business and reduce its reliance on TSMC.
Like Intel, Cisco is also jostling for a position in a fiercely competitive AI chip sector. However, it doesn’t have to worry about competing with specialist foundries as it relies on Samsung for fabrication.
Moreover, semiconductors form just a small component of Cisco’s sprawling technology empire.
Cisco’s AI and Cybersecurity Investments
With a stake in so many software and hardware enterprises, Cisco’s latest job cuts “allow it to invest in key growth opportunities and drive more efficiencies in its business,” the firm said in a press release on Aug. 14.
To maximize the opportunity, Cisco’s venture arm recently launched a $1 billion fund to invest in AI startups, including Cohere, Mistral AI, and Scale AI.
Alongside AI, cybersecurity has become an increasingly important area of focus for the company.
In September 2023, the firm made its largest acquisition to date, buying the cloud security platform Splunk for $28 billion.
While Splunk is Cisco’s crown jewel in cybersecurity, other recent acquisitions in the space include Valtix, Lightspin, Armorblox, Oort, and Isovalent.
Dell Targets ‘Leaner’ AI-Boosted Business
Echoing Statamemnts from Intel and Cisco’s management, a memo sent to Dell staff on Aug. 8 described a “modernization journey” intended to “simplify how we operate and reimagine work and customer experiences with AI.”
Staff were told the firm would be “getting leaner” and “reprioritizing where we invest”. According to members of Dell’s HR department quoted by Business Insider, the company could ultimately cut its global headcount from around 120,000 down to below 100,000.
Reading between the lines of the memo, job cuts will mostly affect sales teams. A new global sales organizational structure will centralize currently fragmented departments and reorient the firm’s efforts toward the AI market, the message stated.
Meanwhile, the company is upgrading its software and hardware solutions at every level to cater to the new AI-centric computing paradigm.
In fact, if there are any jobs that are safe from Dell’s planned layoffs it is those focused on research and development helping reinvent the firm’s product range for and with AI.
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