There have been no Significant Layoffs at Apple, the Only US Tech Giant. How Long Will it Last?

A total of tens of thousands of employees have been laid off by four of the top five US tech companies in the past three months, shattering myths about the industry's seemingly unstoppable growth.

‍

However, Apple stands out as an exception.

The pandemic has slowed Apple's headcount growth, along with continued demand for its core products, so it hasn't announced any significant reductions to date. It's possible, however, that more modest cost cuts could be forthcoming.

‍

During Thursday's earnings call, the iPhone maker is expected to report its results for the third quarter of 2022. Despite the expected decline in revenue, the company is expected to make a profit.

‍

In a note this week, Wedbush Securities' Dan Ives said that pent-up demand remains strong for upgrading iPhones despite these expectations. Ives writes that Apple is expected to cut some costs around the edges this week, but he does not predict mass layoffs.

‍

There will likely be staff reductions at DA Davison, but not as drastic as those at other large tech companies, according to Tom Forte, a senior research analyst. In an interview with TradeAlgo, he said that Apple would cut headcount, but that it would do so through attrition or reductions at retail.

‍

"While they have not yet adjusted their headcount, they will, like everyone else, do so when demand dictates." he said.

‍

Despite layoffs, Apple has avoided them so far

In the early stages of the pandemic, Big Tech hired heavily due to the surge in demand for digital products.

‍

During the third quarters of 2019 and 2022, Amazon and Meta both doubled their headcounts, according to their securities filings. Over approximately the same period, Alphabet grew its headcount by 64%, while Microsoft added more than 50% to its staff.

‍

Comparatively, Apple's headcount increased by 20%. The number of full-time employees at Apple reached approximately 164,000 in September 2022.

‍

Various degrees of remorse have been expressed by tech CEOs about the mass layoffs caused by over hiring during the early days of the pandemic. Digital services demand shifted back to pre-pandemic levels as pandemic restrictions eased last year. Increasing interest rates and inflation cut consumer and business spending, eradicating the easy money tech companies had tapped into. To adjust to the new environment, household names in Silicon Valley began laying off employees one by one, amid the whiplash.

‍

There have been other strains on Apple's business, even when the company hasn't announced layoffs. Antitrust actions have been threatened against it in the EU and the United States, like other Big Tech companies. Apple announced earlier this month that CEO Tim Cook would take a massive pay cut this year as a result of a shareholder vote after its stock fell by about 27% in 2022.

‍

According to Canalys, global smartphone shipments plunged 18% in the fourth quarter of 2022 due to tightening consumer spending. As well as the lockdowns and unrest in Zhengzhou, China, Apple's business faced supply chain hurdles as well.

‍

While Apple's business is suffering during the downturn, it's doing well in comparison to some of its peers in the technology sector. In its most-recent earnings report, the In the September quarter, iPhone revenue reached a record high, with sales up 8% year-over-year.

‍

Whether Apple can continue to defy gravity will be revealed in Thursday's earnings report.

‍

In an investor note published Tuesday, analysts at Monness, Crespi and Hardt wrote that Apple continues to innovate with high-quality, industry-leading products supported by a powerful digital platform. We believe the darkest days are ahead of us, however, as regulatory headwinds persist.