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The hardware team is spared as Xbox undergoes major cutbacks

It doesn't seem like there have been any layoffs from the team working on the next-generation Xbox.
Jonas Mäki Editor Sweden 7 July 2026

As we reported yesterday, massive layoffs are on the horizon for the Xbox division. Fortunately, it seems that some of these involve developers branching out to form independent studios, but it's still clear that the layoffs will be felt across all teams.

Or... almost all of them. Windows Central is now reporting that the hardware team developing Project Helix appears to be completely spared, which shows that Xbox head Asha Sharma wasn't joking when she began her new tenure by emphasizing just how important Xbox hardware is to Microsoft:

"According to internal sources, Xbox's dedicated hardware division will see the fewest reductions in the multi-wave layoff event announced by CEO Asha Sharma today. Crucially, the highly anticipated next-generation console, codenamed Helix, remains entirely safe and on track."

In short, it sounds like Project Helix is something Microsoft considers extremely important. And speaking of Project Helix, we reported yesterday that there's still hope for a disc drive supporting physical games on the console, as Microsoft is reportedly re-evaluating the idea of offering only downloadable titles.

Editor Sweden Jonas Mäki has written for Gamereactor since 2002, becoming an editor in 2007. He covers the video game industry across news, releases and the business side, with a particular interest in sales figures and where the industry is heading.
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