Narayan AmmachchiHewlett Packard Enterprise (HPE) plans to lay off approximately 2,500 employees, representing about 5% of its global workforce, as its server business grapples with margin pressures following U.S. tariffs on Mexico and Canada.
The cost-cutting initiative is expected to generate annual savings of approximately $350 million by fiscal year 2027. HPE intends to redirect the funds toward expanding its capabilities in artificial intelligence (AI), cloud computing, and high-performance computing.
HPE generates billions in revenue from its server business, which supports a diverse range of applications across edge computing and cloud infrastructure. However, rising competition in the market has forced the company to lower prices, while tariffs have driven up production costs, adding an estimated $120 million to operational expenses.
Analysts estimate that these tariff-related costs have reduced operating margins by 2.8 percent, accelerating the need for restructuring.
The company’s stock declined earlier this week after its latest financial report revealed a slowdown in earnings growth. In response to increasing cost pressures, HPE is diversifying its supply chain by partnering with firms in Vietnam and India, mirroring Apple’s strategy.
However, it continues to face intense competition from industry leaders such as NVIDIA and Dell.
Reports indicate that HPE’s strategic shift toward cloud computing has led to approximately 1,200 job redundancies. Additionally, ongoing legal disputes related to its acquisition of Juniper Networks are adding further financial strain on the company.
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