Qualcomm Inc., the world's largest maker of chips for smartphones, is cutting jobs to cope with sluggish demand for its main product.
According to documents filed with the California Department of Employment Development, the company will cut 1,258 positions in San Diego and Santa Clara, California. A Qualcomm representative declined to comment on the overall size of the layoffs, which now total about 50,000 employees.
More than 750 of the jobs eliminated were in Qualcomm's engineering department, ranging from director to technician levels. The rest of the cuts will come from positions such as in-house technicians and accountants. Qualcomm said in the notice that the layoffs will begin in mid-December.
Qualcomm is the world's largest supplier of mobile chips, and its business is mainly concentrated in the fields of smartphones, tablets, and in-vehicle infotainment systems. However, in the recent period of time, the global smartphone market has become saturated, coupled with the slowdown of 5G network construction, which has put greater pressure on Qualcomm's performance.
In this context, Qualcomm has to take measures to optimize operating costs and improve efficiency. Layoffs are one of them, and this measure is also one of the industry's common ways to cope with market downturns. Many tech giants have not escaped the wave of layoffs.
Akash Palkhiwala, Qualcomm's chief financial officer, told analysts in August that Qualcomm would "aggressively implement additional cost measures."
He said on a conference call: "We have previously indicated that as the environment continues to change, we will evaluate additional cost actions. Until we see signs of sustained improvement in fundamentals, our operating framework does not expect an immediate recovery."
The company, which reports earnings next month, is expected to report a roughly 19% decline in revenue for the fiscal year.
While CEO Cristiano Amon is trying to push Qualcomm's products into new areas, the majority of the company's sales still come from the phone market. Demand for the iphone, especially in China, has not rebounded as quickly as some had predicted.
As of Thursday's close, Qualcomm was down 0.3 percent at $111.46. The stock is up about 4 percent this year, lagging the nearly 40 percent gain in the Philadelphia Stock Exchange Semiconductor Index.