Qualcomm Slashes 1258 Jobs in U.S. Cost-Cut

In recent news, reports from international media sources have revealed that Qualcomm, a leading smartphone chip manufacturer, is taking strategic actions to address reduced demand for its primary product lines. As a part of this strategic shift, the company is set to initiate a workforce reduction, affecting 1,258 employees located in the state of California, USA.

According to reports by Bloomberg, Qualcomm, renowned for its chip manufacturing expertise, is implementing a series of layoffs in response to decreased demand for its core products. The company has officially submitted documentation to the California Employment Development Department, outlining its plans to eliminate 1,258 positions based in San Diego and Santa Clara, California. These layoffs, exceeding the threshold of 1,200 employees, necessitate formal documentation to be submitted to local authorities in compliance with state regulations.

Notably, the affected workforce includes more than 750 members from Qualcomm's esteemed engineering teams, spanning a spectrum of roles, from directors to technical professionals. The remaining positions set for elimination encompass a diverse range of roles, including internal technical staff and accounting personnel.

Qualcomm has announced that these workforce reductions are slated to commence in mid-December. Historically, Qualcomm's primary source of revenue has been derived from smartphone chip sales. However, in light of the ongoing decline in global smartphone shipments, as evidenced by a 10% decrease in overall shipments during Q2 of 2023, and amplified competition, particularly in the mid-range segment from industry rivals such as MediaTek, Qualcomm's financial performance has faced significant headwinds this year. The company witnessed a 23% drop in revenues during the third fiscal quarter, with net profits plunging by a substantial 52%.

In line with cost-efficiency objectives, Qualcomm is proactively reducing its operational expenses. This initiative follows a pattern that began last year, where the company began scaling down its capital expenditures and commenced a series of layoffs at multiple locations worldwide. Prior information suggests that towards the end of the previous year and the commencement of this year, Qualcomm enacted workforce reductions involving several hundred employees in North America. Additionally, in May, they announced a global reduction in workforce by 5%.

Akash Palkhiwala, Qualcomm's Chief Financial Officer, has previously communicated that the company's cost-reduction strategy will persist until clear signs of sustained improvement in its core operations become apparent. This strategy is anticipated to extend into the next fiscal year.

Qualcomm is scheduled to release its financial report in November, with forecasts projecting a 19% decrease in revenues for this fiscal year. Despite the endeavors of CEO Cristiano Amon to diversify Qualcomm's product portfolio into emerging markets, a significant portion of the company's revenue continues to be derived from the smartphone market. The speed of recovery in smartphone demand, encompassing flagship products such as the iPhone, is notably slower than originally anticipated. These developments in Qualcomm's operations hold implications for various stakeholders, including industry participants, supply chains, and market dynamics.

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