Updated with week-ending market decline, quick interest in Threads and Nvidia's 172% share climb in six months.
Taking into account Friday’s US jobs report and recent semi-scary data about chip sales (down 21%) alongside dismal tech layoffs, it easy to say the tech industry remains in a generalized state of anxiety after a long slog through three years of pandemic, supply chain shortages and global instability.
First, the semi-promising: Many economists consider chip sales a strong long-term economic indicator for tech overall. The chips sector has followed a very predictable pattern for the past four decades with downward sales of a year or more interspersed with years of robust growth. Overall, the industry has been on track to $1 trillion in global annual sales this decade.
With that history in mind, the WSTS recently reported global chip sales were up 1.7% month-to-month in May, the third consecutive monthly increase, even while May was down by 21% from a year earlier.
That meant sales in May were $40.7 billion, down from $51.7 billion in May 2022 and up from April’s tally of $40 billion. Semiconductor Industry Association CEO John Neuffer said the third month of increasing sales in May is “sparking optimism for a possible market rebound during the second half of the year.”
Second, those distressing tech layoffs: Layoffs.fyi has just tracked nearly 216,328 tech layoffs in the first six months of 2023, more than the 164,709 laid off in tech for all of 2022.
These layoffs are across the biggies like Google, Microsoft, Meta and Amazon but also startups, for a total of 837 companies. These layoffs include healthcare, retail, crypto, food, transportation—all of them industries that rely on chips, of course, to conduct business.
Layoffs.fyi tracks the layoffs in many different ways, by company name and date according to crowdsourcing data as well as company statements. https://layoffs.fyi/
TechCrunch.com also has posted what it calls a “comprehensive list of 2023 tech layoffs.” .
January was the worst month by far for tech layoffs in 2023, at nearly 85,000, and June was the least miserable at 10,524. The trend was improving, if it is possible to put “improving” in the same paragraph with “layoffs.”
Third, the mixed-message US jobs report: Job growth slowed in June (not good), but unemployment fell to 3.6% (not bad).
Labor Department data said payrolls increased by 209,000 jobs in June, compared to an increase of 306,000 added jobs in May. The 3.6% unemployment rate dropped slightly from 3.7% in May. Wages have increased 4.4% over the last 12 months.
While tech and finance are still purging some workers while hiring some others, leisure and hospitality are hiring to catch up after losing employees and accelerating retirements during the pandemic. Still, employment in leisure and hospitality is 2% below its February 2020 level, the government said. The labor department also pegged employment in professional, scientific and technical services at an increase of 23,000 workers in June.
Reuters also reported in a survey of economists that companies are hoarding workers in some cases after experiencing labor shortages when the economy rebounded in 2022 after the first part of the pandemic.
Hoarding could also be happening in tech companies for some select jobs, but the preference seems to be to offer early buy-outs or early retirement incentives to some experienced tech workers with advanced degrees. One long-time Intel worker recently told Fierce Electronics of plans to reapply to work at the company in another reorganized division in a year after being given a severance deal.
For some companies like memory maker Micron, export controls by China could become a bigger concern in the coming months. Treasury Secretary Janet Yellen addressed such concerns on Friday during a visit to China.
In summary, there is clearly lingering queasiness about jobs, chips and the economy in the tech sector. Nothing really new here as long as the bromide is nearby.
The vagaries of the stock markets don't help much, including Friday's tumble on apparent fears of another interest rate increase later in July. But short-term concerns over how the Fed behaves in the US do not replace enthusiasm for new technologies such as generative AI and even the new Twitter competitor Threads.
The latter picked up 70 million sign ups one day after its launch. As for generative AI, Nvidia and its GPU offerings provide a clear standout: the company saw its share price up by 2% over the previous week. For the past six months, Nvidia has climbed just a little--172%-- to more than $425 per share. As with most things in tech, industry leaders keep one eye on the short term and the other on the long term, even the very long term.
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