The company had hinted at these layoffs in its last earnings report, attributing them to “the continued uncertainty in the macroeconomic and demand environment.” In simpler terms, Qualcomm is downsizing to adapt to lackluster demand for its main product.
Approximately 1,064 workers from its San Diego office and 194 workers in Santa Clara will be affected. Notably, there won’t be any facility closures at either location, according to recent filings with the California Employment Development Department.
The chip manufacturing industry has faced numerous challenges in production and the supply chain over the years, impacting Qualcomm’s business practices. In response, the company is planning restructuring actions to refocus on various aspects of the chip manufacturing industry. These actions are expected to be substantially completed in the first half of fiscal 2024.
As Qualcomm approaches its upcoming earnings report, it anticipates a revenue shrinkage of about 19% in the current fiscal year. Well-known tipster Ming-Chi Kuo adds to the concerns, suggesting that Qualcomm’s System on Chip (SoC) shipments to China in 2024 will be 50 million units lower than this year, with a continuing decline.
Additionally, Qualcomm faces challenges with the Samsung Exynos 2400 gaining higher-than-expected market share. Samsung is expected to use this deca-core chipset on some Galaxy S24 series phones next year instead of the Snapdragon 8 Gen 3. Another hurdle is that Apple plans to use its own 5G modem chip, replacing Qualcomm’s, by 2025.
