HP to Lay Off Up to 6,000 Employees Amid Rising AI Chip Prices

Consumer electronics major HP Inc has announced plans to lay off as many as 6,000 employees in fiscal year 2026 as part of fresh global restructuring. The move comes amid rising component costs, especially for chips powering artificial intelligence (AI).

On Tuesday, the Palo Alto-based company said it would undertake a “company-wide” restructuring that would cost $650 million and is expected to generate about $1 billion in savings by the end of fiscal 2028. HP Inc’s fiscal year runs from November 1 to October 31.

HP has 58,000 employees worldwide, according to GlobalData. In an earlier restructuring, the company laid off an additional 1,000 to 2,000 employees in February.

In its fourth fiscal quarter, HP posted revenue of $14.6 billion, a 4.2% rise from a year earlier. For the full fiscal year 2025, HP reported $55.3 billion in net revenue, up 3.2%. About 30% of HP’s shipments in the fourth quarter came from AI-enabled PCs.

HP’s teams focused on product development, internal operations and customer support will be affected by the job cuts, CEO Enrique Lores said. He also warned about the expected impact of price pressure.

A global surge in memory chip prices, driven by rising data-centre demand and Big Tech’s AI development, is expected to raise costs and squeeze margins for consumer electronics makers such as HP, Dell and Acer.

Prices for DRAM and NAND are climbing amid intense server-market competition. HP CEO Enrique Lores said the company has enough inventory to manage the first half of fiscal 2026 but expects the impact of higher prices to hit in the second half.

“We are taking a prudent approach to our guide for the second half, while at the same time implementing aggressive actions like qualifying lower-cost suppliers, reducing memory configurations and taking price actions,” Lores said.

Beyond layoffs, HP’s restructuring also includes a company-wide AI initiative aimed at driving profitable growth by improving customer satisfaction, accelerating product innovation and boosting productivity.

Around 20% of the benefits are expected to come from faster product development and scaling software innovation driven by new AI solutions. Another 40% will come from enhancing customer experience through more efficient service delivery, better support and stronger solutions capabilities. The remaining 40% will be achieved through operational excellence, using AI to raise productivity across HP’s technology infrastructure, supply chain and core operations while maintaining resilience.