News from Qualcomm unnerves everyone
News from Qualcomm, one of the world's largest mobile chipset manufacturers, has unsettled the tech world.
In response to weakening demand for its products, Qualcomm, the preeminent mobile chipmaker, is trimming its workforce. Starting December 13, the company will be reducing 1,258 roles across its San Diego and Santa Clara locations in California. This reduction equates to approximately 2.5% of its total staff. Notably, the company's engineering department will experience the most significant reduction, losing over 750 roles that span from directorial to technical positions.
These measures are deemed necessary by Qualcomm to ensure they can continue to direct investments towards pivotal growth areas, especially considering the unpredictable macroeconomic landscape and the fluctuating product demand. The company's financial projection is less than optimistic, predicting a revenue dip of 19% for the current fiscal year. Even with CEO Cristiano Amon's concerted efforts to diversify the product lineup, the primary revenue stream remains tethered to the mobile phone market, which hasn't bounced back as initially anticipated.
News from Qualcomm unnerves everyone
Further challenges loom for Qualcomm with news that Huawei, a significant player in the market, intends to transition entirely to their proprietary Kirin processors by 2024. Such a move would undoubtedly impact Qualcomm's bottom line. Industry expert, Ming-Chi Kuo, posits that this switch will not only deprive Qualcomm of orders from Huawei but also potentially reduce orders from other non-Huawei Chinese brands, owing to intensified competition. For context, in 2022 and 2023, Huawei's orders to Qualcomm stood at 23-25 million and 40-42 million mobile phone SoCs, respectively.
This looming challenge is compounded by the reality that tech giants like Samsung and Apple are delving into developing their mobile phone chips. The broader tech sector isn't immune to challenges either, with notable companies such as Meta and Twitter also announcing staff reductions in recent times. A culmination of factors like escalating inflation rates and supply chain interruptions has contributed to this industry-wide slowdown.
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