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A Wave of Job Cuts Is Crashing Into the Tech Sector

The tech sector has been on a hiring spree for years, but that all looks set to change amid the deepening economic gloom.

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.

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.

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