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Qualcomm plans layoffs as smartphone market slows

By Nithya Bose in US business news, posted August 3, 2023

Qualcomm is expecting a new layoff round as it faced a decline in its stock value following poor sales results.

As the producer of chips used in iPhones and Android handsets, Qualcomm has sought growth in new sectors due to a slowdown in its core mobile-phone chip business.

Smartphone sales surged during the pandemic but stagnated in recent quarters, with the second quarter seeing a 7.8 percent year-on-year decrease, according to International Data Corp.

In the latest quarter, Qualcomm reported a handset chip revenue of $5.26 billion, reflecting a 25 percent drop compared to last year and falling short of analysts' expectations in a FactSet survey.

Consequently, the company's shares plummeted by over 7.5 percent during after-hours trading.

Qualcomm presented an estimate that handset sales for this year would likely experience a decline of at least a high-single-digit percentage.

The semiconductor maker attributed this anticipated drop to a weaker global economy and a slow recovery in China.

Qualcomm CEO Cristiano Amon confirmed the company's intention to reduce costs to address the challenging market conditions.

In a regulatory filing, the firm indicated that this would mainly involve layoffs, though the exact number of affected jobs was not specified.

Qualcomm had approximately 51,000 employees as of September last year, and it has undertaken layoffs in previous downturns.

CFO Akash Palkhiwala said: “Until we see sustained signs of improving fundamentals, our operating framework does not assume an immediate recovery.”

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He added that the cost-cutting measures would continue into the firm’s next fiscal year.

Qualcomm's sales saw a 23 percent decrease, totaling $8.45 billion, falling below Wall Street estimates.

Its profits also declined by more than half, reaching $1.8 billion.

Qualcomm's revenue outlook for the current quarter, ranging from $8.1 billion to $8.9 billion, falls behind forecasts.

Qualcomm's subdued performance occurred simultaneously with a broader recovery in the PC market, which positively impacted sales for chip-making giants like Intel and Advanced Micro Devices, as reported recently.

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