AI’s left hand takes jobs before its right hand can

Samsung India has initiated job cuts within its television and home-appliance divisions due to soaring memory-chip prices, according to recent reports. Artificial intelligence (AI) is contributing to the layoffs, but there is an underlying cause: AI is driving up the cost of essential components for Samsung's businesses. As chipmakers prioritize chips for AI servers over those for everyday electronics, the supply of conventional memory is dwindling, leading to increased prices.

This situation is an early indication of how AI can indirectly result in job losses. After AI takes over a worker's task, the demand for chips, capital, and other resources can make the worker's job economically unfeasible for the company. Samsung's strategy involves consolidating branches and potentially reducing its electronics sales and marketing workforce by up to 25%.

The escalating demand for high-bandwidth memory (HBM) used in AI processors exacerbates the issue. Companies like Samsung, SK Hynix, and Micron have shifted production capacity towards these more lucrative products, leaving conventional DRAM and NAND used in consumer electronics in short supply. Consequently, DRAM prices have surged, further straining Samsung's profitability.

The impact of AI extends beyond memory chips and encompasses a broader range of resources, including electricity, data-center equipment, and specialized components. As AI infrastructure expands, it competes with other industries for limited physical resources, potentially leading to increased electricity demand and supply challenges.

While higher input costs do not guarantee layoffs, they can become a decisive factor when companies cannot raise prices or accept reduced profits. Energy-intensive manufacturing processes may become more vulnerable to AI-driven layoffs as electricity bills rise due to competition for grid capacity or scarcity of essential components.

Companies are also redirecting resources towards AI infrastructure, which can result in workforce reductions. Uber recently announced plans to cut around 3,300 corporate jobs as it invests billions in its robotaxi business. Although these layoffs are not directly caused by AI replacing individual employees, they reflect the broader trend of redirecting capital towards AI, thereby impacting corporate workforces indirectly.