Are tech sector layoffs affecting hardware manufacturers?

While the information technology sector has seen upheaval in the form of layoffs, this week a company in a different sector within that industry also took an axe to its workforce.

Dell announced layoffs and KIRO 7 spoke to an industry analyst to see if the cuts mean anything broader when it comes to computer hardware.

Dell said it would let go about 5% of its workforce or more than 6,000 of the company’s employees. The company said the “challenging global economic environment” is the reason for the job cuts.

Many of the tech companies that have been cutting jobs are often software or internet-based, but Dell builds and sells computer hardware. The company has been dealing with reduced demand for computers.

Consulting firm Gartner released a study in January that said PC shipments fell more than 28% in the fourth quarter of 2022 compared to the same period the prior year. That was the largest decline since Gartner began tracking PC sales in the mid-90s. Dell saw a 37% decrease in PC shipments for the end of 2022, compared to the same time in 2021.

Muddu Sudhakar is the founder and CEO of Aisera, a software company based in the Bay Area. He has watched the industry as it comes to terms with a trend of over hiring — and now cutting back — on workforce.

He said if new innovation like Microsoft’s Artificial Intelligence & Cloud Computing continue to grow they’ll need hardware and that could restore some sales.

“The good news for the hardware sector you know, we’ve gone through a very difficult supply chain. We are short a lot of semi-conductors and chips. I think (hardware manufacturers) are in a much better position than software, outside looking in. But Dell is seeing it, Intel is seeing it, but I think at some point, most system manufacturers like HP and Lenovo — those vendors will have some impact. The growth of the cloud providers if you look at the Googles, the AWS (Amazon Web Services), Azure — if they have slowed down by 10% that means they’re buying less hardware,” said Sudhakar.

That study by Gartner also showed that every single company in the computer hardware sector saw losses in the last quarter of 2022, including Lenovo, HP and Apple. Despite that, Sudhakar says automation could help computer manufacturers bounce back. He also believes that the hardware sector could see a rebound faster than some of the other areas, but that remains to be seen.

The computer manufacturing sector is expanding in some instances. Last month, IonQ, a company working in the quantum computing area, announced plans to open a manufacturing facility in Bothell.

A news release said the new facility will house R&D and manufacturing — a billion dollar investment, with a plan to add thousands of new jobs to the Pacific Northwest region over the coming years.