Recently, the international chip giant Qualcomm layoffs topic continues to ferment. According to the news of the social platform, Qualcomm is about to withdraw from Shanghai, and some of the laid-off workers can get the maximum "N+7" compensation, and there is no triple cap limit.

However, Qualcomm responded to the first financial and other media on the matter on September 21, saying that the layoffs were part of the company's overall business adjustment measures, and the statements such as "large-scale withdrawal from Shanghai" and "one nest end" were exaggerated.
In the context of the global consumer electronics market downturn, Qualcomm's life is not easy. Overseas, Qualcomm's leading position in the field of IC design has been replaced by Nvidia, and major customers Apple and Samsung are also planning to get rid of their dependence on Qualcomm chips.
Revenue and net profit have declined for three consecutive quarters
Qualcomm's layoffs are mainly related to its wireless business research and development department. Public information shows that Qualcomm has research and development centers in Beijing and Shanghai, and the specific number of employees is not disclosed.
Qualcomm's layoffs have been foreboding. According to the financial report, as of September 25, 2022, Qualcomm has 51,000 employees. At the CIIE in November last year, Meng Pu, chairman of Qualcomm China, revealed that in the past five years, the number of employees in China has increased by more than 20% per year, and the number of employees has exceeded 6,000.
In February's earnings call, Qualcomm CEO Cristiano Amon said: "Given the current macroeconomic and demand environment, Qualcomm is further reducing expenses and streamlining operations."
In June, Qualcomm announced 415 layoffs at its San Diego headquarters and 84 layoffs in the San Francisco Bay Area.
In addition, Taiwan media broke the news that Qualcomm in Taiwan, China has also launched a layoff plan, is expected in October or will lay off about 200 people, accounting for about 10% of its employees in Taiwan, affected by profit less than expected, the remaining staff dividends will also be 70% discount. Qualcomm said in a statement that the adjustment measures in Taiwan are also part of the above global business adjustment, but the specific plan is still under discussion.
Earnings data show that Qualcomm's revenue and net profit have declined for three consecutive quarters.
In the third quarter of 2023, Qualcomm's revenue was $8.451 billion, down 23% from $10.936 billion in the same period last year, and net profit fell 52% to $1.803 billion. In the second quarter and the first quarter, Qualcomm's revenue was $9.275 billion and $9.463 billion, respectively, down 17% and 12% year-on-year. Net income was $1.704 billion and $2.235 billion, respectively, down 42% and 34% year-on-year.
The QCT unit is Qualcomm's main source of revenue and is responsible for the production of chips used in smartphones, cars and other smart devices, of which mobile chips are the most important. In the third quarter, mobile phone chip related revenue was $5.255 billion, accounting for 73.32% of the QCT segment, which was down about 25% from last year.
The overall demand of the international consumer electronics market is sluggish, and upstream chip companies are difficult to escape. According to market research firm Canalys data, in the second quarter of 2023, the global smartphone market shipments fell 11% year-on-year, and the total shipments of desktop and notebook computers fell 11.5% year-on-year.
Gu Chengjian, founding partner of Hecheng Consulting, who has long been concerned about the chip and semiconductor market, told Times Finance that Qualcomm's performance is under pressure, while facing competition from domestic chips in China, and layoffs are normal market behavior.
Not only Qualcomm, but Mediatek employees told Time Finance that the company also has layoff plans.
In Gu Chengjian's view, with the decline in demand for end products, layoffs have become a common problem facing the entire industry. "There is a surplus of talent in the overall industry, which is also a process of active market optimization, and good talents can still get better job opportunities." However, Gu Chengjian admits that the wages that have pushed up in the past may stagger or even decline in the next few years.
In the just past third quarter 2023 results presentation, Qualcomm once again reiterated that it is expected that the main adjustment measures will include layoffs and will generate a large number of additional adjustment expenses, a large part of which will occur in the fourth quarter of fiscal 2023, and the corresponding adjustment measures will be basically completed in the first half of fiscal 2024.
Domestic and overseas markets are under siege
Looking at the global market, revenue from Apple and Samsung is an important part of Qualcomm's revenue. In the context of the weak consumer electronics market, both shipments are still considerable. In the past 2022, Canalys data showed that fewer than 1.2 billion smartphones were shipped globally in 2022, with annual global shipments declining by 12% year-on-year. Samsung topped the list with 258 million units shipped, followed by Apple with 232 million.
According to Strategy Analytics estimates, more than 40% of Qualcomm's fiscal year 2022 revenue came from Apple and Samsung.
However, the two are also trying to wean themselves off Qualcomm. As early as 2019, Apple spent about $1 billion to acquire a majority stake in Intel's communications baseband chip business, while accepting about 2,200 former Intel baseband business employees, and planned to reduce the demand for Qualcomm with self-developed chips.
Samsung has set its sights on AMD and will work with it to develop a new generation of mobile chips called the Exynos 2500, which will be installed in the Galaxy S24 series to be released next year. According to media sources, Samsung has also set up a working group dedicated to the development of special chips for Galaxy series mobile phones.
A series of actions are indicating that the two want to spread their "eggs" into more baskets. Still, the transition will take time. Taking Apple as an example, recently, Qualcomm once again won Apple's orders for the next three years, and will provide Snapdragon 5G modems and RF systems for its smartphones launched in 2024, 2025 and 2026, which also means that Apple's self-developed baseband chip business has not been successful, and will continue to delay the launch.
Another threat to Qualcomm comes from Nvidia. The stimulation of the wave of artificial intelligence has made Qualcomm lose the leading position in the industry occupied by mobile phone chips.
TrendForce's latest report shows that in the second quarter of 2023, Nvidia replaced Qualcomm to become the first IC design company revenue. Nvidia's market share increased to 29.7 percent, and overall quarterly revenue surged 68.3 percent sequentially to $11.33 billion. No. 2 Qualcomm's market share fell to 18.8 percent, with quarterly revenue of $7.17 billion, just two-thirds of Nvidia's.
With the blessing of generative AI, the demand for Nvidia GPU chips has skyrocketed, becoming a "shovel seller" who has earned a living under the gold rush. Its A100 chip released in 2020 is regarded as the hard currency of large model operation, as of the close of the United States Eastern time on September 22, Nvidia's market value is $1.03 trillion, equal to about 8.5 Qualcomm.
Qualcomm and Nvidia switch offense and defense, which means the retreat of the mobile phone era and the arrival of the AI era.
Qualcomm reported that revenue from the automotive chip business maintained growth. In the third quarter of 2023, related business revenue of $434 million, an increase of 13%.
Data from Frost & Sullivan pointed out that at present, a new energy vehicle uses an average of more than 1,500 chips, which is twice the chip consumption of traditional fuel vehicles, of which the chip cost accounts for 5-8% of the cost of the vehicle.
Automotive chip demand is booming, but this sector is also facing intrusion from Nvidia. In May this year, Nvidia and Mediatek have reached an agreement, and the first chip locked smart cockpit between the two is expected to come out in 2025 and go into mass production in 2026 to 2027. At the same time, the two sides said that this cooperation is also expected to expand to other areas.
In terms of stock prices, as of the close of the United States Eastern time on September 22, Gao reported 107.68 US dollars/share, which fell by about 21.5% compared with the highest price of 137.16 US dollars in February this year, and the total market value fell by about 34.2 billion US dollars (about 249.6 billion yuan) compared with the highest value of the year (154.383 billion US dollars).