In its upcoming quarterly results on May 3, Qualcomm, the multinational chip manufacturer, is expected to announce significant job cuts affecting approximately 5% of its workforce, according to sources familiar with the matter. The decision to downsize comes as a response to a drop in sales and the ongoing tech slowdown, which has prompted various industry players to make similar cuts globally.
While assessing the situation and evaluating its strengths, Qualcomm has determined that its mobile division will be the most affected. Sources claim that around 20% of employees in the mobile division will face layoffs.
Qualcomm's decision to realign its mobile division is in line with its efforts to navigate the current macroeconomic and demand environment. The company aims to implement spending reductions and streamline operations without losing sight of growth and diversification opportunities. The anticipated layoffs align with Qualcomm's commitment to actively manage operating expenses, as highlighted by CEO Cristiano Amon during the earnings call in February 2023.
The decline in smartphone sales over the past quarters has had a direct impact on Qualcomm's business. Slumping smartphone sales have led to a decrease in demand for mobile handsets, affecting Qualcomm's chip manufacturing operations, which are a significant source of revenue for the company.
In the quarter ended December 2022, Qualcomm reported a 34% year-on-year decline in net income, accompanied by a 12% drop in revenue compared to the previous year. These results were attributed to the macroeconomic slowdown and the decline in smartphone demand. The company's difficulties align with the global trend, as data analysis firm International Data Corporation reported an 11.3% decrease in global smartphone shipments in 2022. The firm also predicts a further decline of 1.1% in smartphone shipments for 2023.
Qualcomm's response to the challenges it faces includes the implementation of cost-saving measures and a realignment of resources to adapt to the evolving market conditions. While these measures may result in job losses, they aim to position the company for future growth and capitalize on emerging opportunities. As Qualcomm continues to navigate the tech slowdown, its focus on managing expenses and optimizing operations remains paramount.