Job losses, banking crisis will take huge toll on innovation

Amazon and Meta recently announced their second round of layoffs, sacking 9,000 and 10,000 employees respectively, just months after the two giants curtailed 18,000 and 11,000 jobs respectively, adding more uncertainties to the outlook of the US economy after its market confidence was rocked by a banking crisis.

US high-tech enterprises have been seeing undercurrents since 2022 with signs emerging that the sector's rapid development lasting nearly 20 years has come to an end. The tech sector has seen the most aggressive industrial expansion, and the COVID-19 pandemic offered scope for explosive growth through online trade. However, with the end of the pandemic and the gradual recovery of offline production, the over-expanded virtual economy is contracting, prompting US high-tech enterprises to make structural adjustments.

Weakened long-term demands and increased risk of recession because of an ever-strong dollar, protracted inflation, and drastically raised interest rates by the Federal Reserve have also impacted US high-tech enterprises considerably.

The latest round of layoffs in the US high-tech sector has further underscored the consequences of the irresponsible policies of the US government. In recent years, the US has politicized and weaponized science, technology and trade issues, used administrative means to impose unjustified sanctions on commercial enterprises, and tried to block normal international cooperation among high-tech companies. A series of irresponsible practices by the US, from formulating the CHIPS and Science Act to introducing the Inflation Reduction Act, have seriously undermined market rules, the international economic and trade order, and the stability of global industry and supply chains.

The all-out efforts made by the US to push for "decoupling" have also hurt its tech sector and the world economy. A US-based semiconductor company has said the new round of export controls imposed on China will cost it billions of dollars in revenue losses while also making it cut funding for research and development. While the high-tech sector is the barometer of the US economy, what makes things worse is the banking crisis.

US President Joe Biden says he had done everything possible to address it, but analysts say the closure of Silicon Valley Bank, which handled start-up investment, could shake up the US' startup ecosystem. This could weaken US high-tech enterprises' will to innovate, creating "butterfly effects" that may change the landscape of global scientific and technological innovation.