Dive Brief:
- Cisco will shed close to 4,000 jobs in a bid to focus on its silicon, optics and cybersecurity businesses CEO and Chairman Chuck Robbins told employees Wednesday. The cuts amount to nearly 5% of Cisco’s workforce.
- The layoffs come at a time of record growth for the tech giant. Cisco’s revenues increased 12% year over year to $15.8 billion in FY 2026 Q3 ended April 25, as hyperscalers and enterprises purchased hardware to support AI-driven data center buildouts. Orders for data center switching spiked 40%, driven partly by customers fast tracking purchase in response to a memory chip shortage.
- Cisco is making strategic investments in “our employees’ use of AI across the company,” Robbins wrote. “These investments are building from a position of strength – and focusing on the technologies and businesses that will accelerate our growth, deliver unmatched innovation to customers and partners, and define our future.”
Dive Insight:
Cisco executives didn’t cite agentic AI for the layoffs as security vendor Cloudflare did last week, but the restructuring repositions the company for the infrastructure-oriented products that AI compute is boosting.
EVP and CFO Mark Patterson told investors the company needs to move quickly and put money in its fastest-growing areas, speaking during the Wednesday earnings call
“We don't always have the exact resources that we need going forward in the right places. And so that's really what this is about versus savings,” Patterson said.
Part of the $1 billion in savings Cisco expects over the next year will go toward advancing its Silicon One networking architecture.
The company collected multiple design wins from hyperscaler customers for the Silicon One P200 routing processor in the quarter, Robbins told analysts.
“We'll begin to see some early orders in Q4, but not at scale until we move into fiscal year '27. So I think it's a byproduct of just a lot of great relationship work that the teams have been doing over the years. They love our silicon. They love the supply, and they love our optics,” Robbins said. “We just intend on continuing to work really hard and deliver what they need.”
Designing its own silicon also gives Cisco a supply chain edge as OEMs struggle to get their hands on memory chips. The company is sitting on an eight-month stockpile, according to Patterson.
“The fact that we're directly managing wafers, substrates, assembly and test really gives us much more control over the supply chain, if you will,” Patterson said.
Cisco is also running more than 20 programs designed to reduce memory utilization in its products. The vendor plans to launch wireless products that require 50% less memory, Patterson said.
