Some receive tens of billions… The terror of another round of layoffs [Song Young-chan's Silicon Valley Focus]

'Hundreds of Billions' Annual Salaries for AI Talent, Layoffs for General Staff

AI Polarization Hits the US

The polarization of jobs due to advancements in artificial intelligence (AI) technology is becoming more pronounced, especially in the US tech industry. While big tech companies launch large-scale layoffs targeting general office staff whose roles can be replaced by AI, they fiercely compete to recruit AI talent by offering compensation packages worth hundreds of billions of won. With the so-called 'labor market big bang' driven by AI materializing early in the US, there are growing calls in Korea for swift upskilling programs and AI talent cultivation strategies.

US Tech Companies Lay Off Over 60,000 in the First Half of the Year

On the 18th (local time), Bloomberg News, citing sources, reported that Microsoft will announce a restructuring plan to lay off thousands of employees early next month. The main targets are expected to be the sales and marketing divisions, which make up about 20% (45,000 employees) of the company's workforce. If this plan is implemented, it will mark the second large-scale restructuring for Microsoft in just two months. Last month, Microsoft laid off about 7,000 employees, primarily in product and engineering divisions—the second largest round in its history. At that time, Microsoft explained, "We are making the organizational changes needed to succeed in a rapidly evolving market environment."

The 'layoff storm' is not limited to Microsoft—it has spread across Silicon Valley's tech industry. Meta laid off 3,600 employees in February, accounting for 5% of its total workforce, while Google has cut hundreds of jobs in divisions such as advertising, devices, and cloud services since February. Intel, which laid off approximately 17,500 employees last year, plans to reduce 15–20% of its foundry division workforce starting next month. This round of layoffs is also expected to exceed 10,000 employees. According to Layoffs, a global employment data analysis firm, layoffs in US tech companies have already surpassed 60,000 in the first half of this year.

One notable characteristic is that the reasons for restructuring are changing. Last year, restructuring in the tech industry was mostly to secure funds for AI infrastructure investment. Now, however, actual jobs are being replaced by AI. According to a recent report by McKinsey Global Institute, support roles (such as assistants and accountants) are projected to decrease by 18% in 2030 compared to 2022. Sales (-13%), food service (-2%), and manufacturing (-1%) jobs are also expected to decline due to AI. Andy Jassy, CEO of Amazon, remarked the previous day, "With the widespread adoption of AI across the company in the coming years, office staff is expected to decrease." Dario Amodei, CEO of Anthropic, warned in an interview last month, "AI could eliminate half of all new office jobs within the next five years and drive the unemployment rate up to 20%."

'Astronomical Compensation' Offered to AI Talent

Amidst the layoff storm, the opposite trend is observed for AI-related positions. According to joint research by the University of Maryland and the employment data platform LinkUp, as of last month, AI-related positions accounted for 24% of new job postings in US tech companies—a sharp increase from May 2023 (9%) and May last year (16%).

The competition to attract highly skilled AI experts is intensifying. Meta, which is seeking to establish a super-intelligence research center, is reportedly offering compensation packages worth up to hundreds of millions of dollars to attract AI talent from competitors like OpenAI and Google. Sam Altman, CEO of OpenAI, commented the day before, "Meta is offering our employees signing bonuses of up to $1 million and even more substantial annual compensation packages," adding, "It's really crazy."

Experts emphasize the urgent need for a whole-of-government response to address job structure changes driven by AI. According to McKinsey Global Institute, the number of workers in the US who will need to transition to new roles due to advances in AI is expected to exceed 12 million by 2030. This is about 40% higher than during the COVID-19 pandemic (8.6 million), when there was a massive shift due to the spread of remote work. McKinsey stated, "It is time for large-scale job training and retraining programs to facilitate smooth workforce transitions."

Silicon Valley = Special Correspondent Young-chan Song 0full@hankyung.com