Recently, American computer manufacturer HP Inc. announced that it plans to cut 4,000 to 6,000 jobs globally by the end of the 2028 fiscal year. According to the company's latest annual report, as of October 2024, HP had approximately 58,000 employees, and the scale of this layoff could exceed 10% of the total workforce. This large-scale layoff plan is part of HP's three-year reform initiative, aimed at enhancing customer satisfaction, product innovation, and production efficiency through the adoption of artificial intelligence (AI) technology.

Background of the Layoffs

The backdrop of HP's layoffs is the high level of attention and widespread application of AI technology in the global tech industry. HP's CEO, Enrique Lores, stated that AI will fundamentally change the company's workforce structure. By leveraging AI technology, HP aims to delegate more repetitive and procedural tasks to AI, thereby reallocating human resources to higher value-added positions. Additionally, as the demand for AI-enabled personal computers continues to grow, HP hopes to accelerate product development and improve production efficiency through AI technology.

Departments Affected and Financial Impact

The layoffs will primarily focus on product development, internal operations, and customer support teams. These departments' responsibilities are highly related to the application of AI technology, and by introducing AI, HP aims to achieve higher efficiency and lower costs in these areas. However, this move has also drawn attention to HP's future development from the market. Following the announcement of the layoffs, HP's stock price fell by 5.5% in after-hours trading on November 25.

HP expects that by the end of the 2028 fiscal year, this layoff plan will result in approximately $1 billion in annualized cost savings. The total restructuring costs associated with this plan are estimated to be $650 million, with about $250 million to be recorded in the 2026 fiscal year. Although there is a need to invest in restructuring costs in the short term, this plan is expected to significantly reduce operating costs and enhance the company's profitability in the long run.

Market Competition and Future Outlook

In the current highly competitive market environment, HP faces challenges from other tech giants. With the growing demand for data centers, global memory chip prices have soared, which may increase the costs for consumer electronics manufacturers like HP and Dell and squeeze their profits. HP expects to feel the impact of rising memory prices on costs in the second half of the 2026 fiscal year, although the company still has sufficient inventory for the first half of the 2026 fiscal year.

This round of layoffs is the second large-scale layoff initiative by HP in recent years. Three years ago, the company implemented a similar-scale layoff plan, which saved $2.2 billion in expenses. Through this layoff, HP aims to further optimize its operational structure and enhance market competitiveness. However, with the continuous development of AI technology and the intensification of market competition, HP will still need to find a balance between technological innovation and cost control in the future to achieve sustainable development.

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