While Google and the Twitch streaming service don’t have physical offices in the Sacramento area, other tech companies do, including Intel in Folsom, Apple in Elk Grove and Solidigm in Rancho Cordova.
Intel laid off close to 900 employees in Folsom in 2023, including 235 on New Year’s Eve. Company officials have warned the California Employment Development Department that they anticipate more layoffs in Folsom in 2024.
The Folsom Intel research and development center had more than 5,000 employees at the beginning of 2023, but company officials did not respond to a request from the Bee for an updated total.
It is one of the Sacramento region’s largest employers.
Financial analysts have said a number of factors are causing the tech sector layoffs including uncertainty about the economy, inflation, higher interest rates and overhiring.
Intel company officials have said the layoffs are part of a cost-cutting move to reduce expenses due a decline in profits.
Meanwhile, South Korean Semiconductor company Solidigm laid off 270 workers in 2023 in Rancho Cordova, EDD notices show.
The company was only born a year earlier after memory chipmaker, South Korea-based SK HynIx, agreed to acquire Intel’s NAND memory chip business in Folsom for $9 billion.
Solidigm officials said in 2022 that not only would the company employ 1,900 workers, many of them former Intel workers, in Rancho Cordova, but it would create 750 new jobs over five years.
Company officials have blamed the layoffs on a prolonged downturn in the semiconductor industry and its impact on market conditions.
Apple, which employs around 5,000 workers in Elk Grove, primarily focused on customer service, repairs and distribution, has not announced any layoffs.
What do these tech layoffs mean for Sacramento region?
Despite the Sacramento region tech layoffs, the impact hasn’t been great on the area because tech jobs only account for a small number of the 1.1 million jobs in the region, said Will Austin, Sacramento-based director of market analytics for the CoStar Group.
He said ironically the impact would have been greater on the region if economic development officials had been more successful in their dream of making the Sacramento region a tech jobs hub.
“One of the upsides of a lack of tech growth in Sacramento is we don’t have the downside,” Austin said.
Still, Austin, who has analyzed required layoff notices companies made to the state for the first 10 months of 2023, found that the combined layoffs by Intel in Folsom and Solidigm in Rancho Cordova made tech the top layoff sector in the region.
That was followed by the insurance industry with 718 job losses, the food/beverage industry with 427 reductions and the finance industry with 326 losses.
He said the two largest employment sectors in the Sacramento region are the government sector and healthcare, which combined account for 40% of the jobs.
Austin said jobs in healthcare increased by 7.1% and government workers increased by 2.8% for the first 10 months of 2023.
He said there is a key difference between those sectors and tech.
“Both government and health care jobs have shown to be resistant to downsizing and are less impacted by changes in economic cycles,” Austin said.
Despite the tech industry’s small presence in the Sacramento region, Sanjay Varshney, the former dean at Sacramento State’s College of Business, worries that a large number of additional layoffs at Intel could have a severe negative effect.
Varshney said he shutters to think what would happen, if say, 2000 more people would lose their jobs. While overall loss might be small compared to 1.1 million workers in the region, it still would have an effect on communities close to the Intel plant, he said.
“It would be devastating on the economies of Folsom and El Dorado Hills where many of the Intel employees live,” said Varshney, who is currently the principal and co-founder of Goldenstone Wealth Management in El Dorado Hills.
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