The unprecedented shakeup that the semiconductor industry experienced in the wake of the coronavirus crisis is continuing to have its effects on the industry in 2022, at a time when the economic fallout from the Russian invasion of Ukraine is making its mark on both developed and developing countries. Following the pandemic, demand for all kinds of chip products surged as lockdowns forced global populations indoors for their productivity and entertainment needs, which in turn resulted in historic orders for chip manufacturers and sellers.
Now, with the debate about a possible recession in the U.S. raging forward, reports are surfacing that several peripheral chip companies, such as ASUS and NZXT are cutting down their workforces, at a time when firms are dealing with high operating costs and everyday consumers are feeling the bite of inflation on their pockets.
PC Component Firms Feel The Burn Of Inflation And Reduce Their Workforce
Today's report comes courtesy of Anshel Sag, who is the principal analyst for the research firm Moor Insights and Strategy. Sag's sources have indicated to him that the trend of layoffs that have plagued the technology industry and hit some of the largest companies in the world such as the electric vehicle manufacturer Tesla, electronic commerce platforms Shopify and Amazon, search engine and technology company Google and the social media giant Meta Platforms.
In fact, the unfortunate turn of events that comes just as disposable incomes are shrinking due to painful inflation is not limited to the aforementioned firms only. A report from Crunchbase that was published earlier this week revealed that only in July close to 32,000 technology company employees lost their jobs.
Crunchbase's data shows that close to 200 technology companies have let employees go, and out of those which have disclosed the number of employees, the largest comes from New York based financial technology firm Better, which has laid off 5,000 employees so far.
Now, Sag has added to these companies and outlined that according to his sources, PC component makers have also started to reduce their workforce.
He outlined on Twitter that:
From what I've heard/seen in the last few months, lots of #PC component vendors have been quietly doing layoffs. This week it's @ASUS, last week it was
@NZXT, and I've heard of others before as well.
Layoffs in the technology industry have come right at the time when policymakers are debating the hotly contested nature of the economy. The segment which has been beating the drumbeat of recession points to inflation and drops in gross domestic product (GDP) growth throughout the course of this year to justify their argument that the economy is not performing up to the mark.
Those on the other side stick to employment figures and the National Bureau of Economic Research (NBER) as a defense against claims of a recession. They state that it is impossible for the economy to add more jobs while it is shrinking, and the commonly accepted definition of a recession which uses two consecutive quarterly GDP growth drops as a metric is inaccurate when it comes to the NBER - which is considered the sole authority to decide whether a recession has or has not taken place.
The semiconductor industry itself is facing a historic downturn as the effects of a post-pandemic demand surge and a cryptocurrency bloodbath have led to a flood of inventory in the market - just at the time when some companies were preparing to launch new products.