Qualcomm lays off employees globally

News of large-scale layoffs by U.S. chip giant Qualcomm in China continues to ferment online.

According to market rumors, the "hardest hit area" of Qualcomm's layoffs this time is the Shanghai wireless R&D department. It was even revealed that the Shanghai R&D center will be directly removed, and the maximum compensation standard is N+7. Although it triggered many discussions, as of press time, Qualcomm officials had not responded to the matter.

On the afternoon of September 20, more than one netizen broke the news on social media that Qualcomm’s Shanghai R&D department had laid off large-scale layoffs, leaving only the HR department and some other personnel, and layoffs would continue in the future.

Subsequently, some self-media articles stated that Qualcomm’s layoffs affected the entire China region. About 50 people in the WiFi department (including software + verification) will be laid off, and design-related personnel will be notified; each remaining department will lay off 20%; The compensation standard is N+4 for ordinary employees and N+7 for senior employees with no fixed-term contracts, and there is no triple cap limit.

Observer.com tried to contact Qualcomm China for verification, but had not received a response as of press time. However, there is no smoke without fire, and Qualcomm, whose performance continues to be under pressure, is indeed cutting costs through global layoffs and other methods recently.

According to reports, in the second quarter of this year, Qualcomm’s revenue was US$8.451 billion (approximately RMB 60.7 billion), a year-on-year decrease of 23%; net profit was US$1.803 billion (approximately RMB 13 billion), a year-on-year decrease of 52%. In the first quarter, the declines in the two key indicators were 17% and 41% respectively. It is not difficult to see that Qualcomm’s performance is accelerating its decline.

From the perspective of market factors, the sharp decline in Qualcomm's performance is not unrelated to the continued sluggish sales of consumer electronics such as mobile phones. According to third-party agency data, after global mobile phone shipments fell by 11% last year, they fell again by 13% and 11% in the first two quarters of this year. During the same period, shipments in the Chinese mobile phone market fell by 11% and 5% respectively; The tablet market is also in sharp decline.

The downstream terminal market is sluggish, and Qualcomm chip sales have also been significantly affected.

In the second quarter of this year, Qualcomm's mobile phone processor business revenue was US$5.26 billion, lower than the average estimate of US$5.36 billion, a year-on-year decrease of 25%. During the same period, in the mobile phone processor market, Qualcomm ranked second with a global share of 29%, down 3 percentage points year-on-year, behind MediaTek's 30%.

Looking forward to the third quarter, Qualcomm's performance still has not stopped falling. The company's performance guidance is to achieve revenue of 8.1 billion to 8.9 billion US dollars, a year-on-year decrease of nearly 22% to 29%, and the median value is lower than the market expectation of 8.79 billion. Dollar.

3 pictures to help you understand why Qualcomm is laying off employees globally

Qualcomm Q3 revenue performance

In January this year, some media reported that Qualcomm laid off dozens of employees in Israel; in June, Qualcomm laid off 415 employees at its San Diego headquarters and 84 employees in the San Francisco Bay Area. At the end of last year and early this year, the company laid off 232 employees in the United States; At the same time, Taiwanese media revealed that Qualcomm may lay off 200 people in Taiwan, China, in October, and the wages of the remaining employees will decline. About a hundred people have already resigned.

When announcing its second-quarter results, Qualcomm disclosed that it recorded restructuring charges of $285 million in the quarter, mainly from severance pay, and expected more layoffs in the future. The company's CEO Amon said frankly: "We are cautious about the market and will actively take additional cost-cutting actions to ensure that the company can bring maximum value to shareholders in an uncertain environment."

For Qualcomm, China is the most important market, bar none.

According to the official website, Qualcomm has been doing business in China for more than 20 years. It has established office locations in Beijing, Shanghai, Shenzhen, Xi'an and Wuxi, established R&D centers in Beijing and Shanghai, and established its first innovation center in the world in Shenzhen.

Qualcomm has not disclosed the total number of employees in China. Market data shows that the company has about 5,000 employees in China.

The financial report shows that Qualcomm’s revenue in the Chinese market reached US$28.1 billion in fiscal year 2022, accounting for 64% of total revenue; Chinese mobile phone manufacturers such as Xiaomi, OPPO, Huawei, vivo, and Honor, as well as most new energy vehicle manufacturers, are all Qualcomm’s client.

But the situation in this largest source of revenue is also changing, and the reason is related to Huawei's new Mate60 series.