Cisco announced a major restructuring plan on Wednesday, aimed at shifting its strategic focus from traditional areas to artificial intelligence and related high-growth markets. According to the plan, Cisco will lay off approximately 4,000 employees, less than 5% of its global workforce.

The layoffs are primarily expected to be completed in the fourth quarter. Cisco CEO Chuck Robbins stated that in the AI era, winning companies must have a high degree of focus and discipline, continuously redirecting investments toward areas with the highest demand and long-term value creation potential.

Separation, Breakup, Layoffs

Strategic Focus: From Infrastructure to AI-Enabled

Cisco is reallocating resources to strategic investment areas such as chips, optical communications, cybersecurity, and employee AI applications by reducing positions in certain traditional businesses. This transformation has already shown initial results:

  • Surge in Orders: So far this fiscal year, Cisco has secured $5.3 billion in AI infrastructure orders from hyperscale cloud service providers.

  • Revised Outlook: Based on strong market demand, the company has significantly increased its full-year AI-related order expectations from $5 billion to $9 billion.

Financial Performance and Market Feedback

At the same time as announcing the layoffs and restructuring plan, Cisco also disclosed its financial data for the third fiscal quarter of 2026. The report showed that the company achieved a net profit of $3.373 billion for the quarter, a 35% increase year-over-year.

Although the company faces organizational challenges due to the layoffs, market analysts generally believe that Cisco's move is to address the "AI arms race" faced by global technology companies. By proactively optimizing its talent structure and increasing investment in computing power infrastructure, Cisco aims to further establish its competitive advantage in the AI infrastructure sector, building on its foundation as a network hardware supplier.