US-based semiconductor giant Qualcomm is making workforce adjustments at its Shanghai office, a decision arising from the existing technological rift between the US and China, combined with prevailing economic challenges. This move by Qualcomm, which holds a significant presence in China, was detailed in a report by China Business News, a Shanghai-based newspaper.
Although Qualcomm remained tight-lipped about the exact number of layoffs, it did address the swirling speculations surrounding its actions in Shanghai. The company dismissed rumors of a massive downsizing leading to a complete shutdown or total withdrawal from Shanghai. This clarification followed claims on Chinese social media platforms hinting at the US tech giant laying off numerous employees from its Shanghai R&D facility. These social media posts also mentioned the provision of generous severance packages for affected staff.
An insider from Qualcomm’s Shanghai office, who wished to stay anonymous, confirmed to the media that while the layoffs were indeed in progress and some employees were being offered compensations, the extent of the workforce reduction remained minimal.
The global semiconductor powerhouse boasts a presence in over 12 cities across China, emphasizing its dedication to the semiconductor and mobile telecommunications sectors. Qualcomm’s commitment to “developing the world’s most advanced technology in China” is underscored on their official website.
In a recent stock exchange announcement discussing its quarterly revenues, Qualcomm intimated potential “workforce reductions” to be part of its broader restructuring endeavors. The firm aims to persistently invest in essential growth sectors and diversify, especially in times of macroeconomic volatility and unpredictable demand. The bulk of these anticipated changes, according to Qualcomm, would transpire in the fourth quarter of fiscal 2023.
A glance at Qualcomm’s financial performance reveals a concerning decline. Over the three months leading up to June 25, the firm witnessed a substantial 23% year-on-year dip in revenue, amassing only US$8.45 billion. This decline was mirrored in its net income, which plummeted 52% to US$1.8 billion.
Being a pivotal supplier for Apple, Qualcomm’s financial trajectory could also be influenced by Beijing’s selective prohibition on iPhone usage among government personnel. However, any negative impact from this might be balanced out by the triumphant launch of iPhone15 in mainland China.
Significantly, data from market research agency Counterpoint indicates a downward trend in the Chinese smartphone domain. The Q2 2023 sales figures reflected a 4% drop compared to the previous year, marking the weakest second-quarter sales since 2014, as economic challenges dampened consumer enthusiasm.
It’s noteworthy that Qualcomm isn’t the lone US chip firm making staffing modifications in China. Earlier in March, California’s Marvell Technology announced its decision to lay off its entire R&D unit in mainland China. This move emerged during an industry downturn and followed the company’s initial steps to downscale its Chinese operations roughly five months prior.
READ MORE: