"Massive layoffs" or "closure of offices"? Qualcomm Response
Recently, news of large-scale layoffs by American chip giant Qualcomm in China has continued to ferment online, and there are even rumors that laid-off employees can receive "N+7" compensation.
On the 21st, Qualcomm responded that the market's rumors of "large-scale layoffs," "office closures," and "evacuation from Shanghai" were exaggerated.
Qualcomm also stated in its third quarter earnings conference call and related reports submitted in August that, given the ongoing uncertainty in the macroeconomic and demand environment, the company expects to take further adjustment measures to achieve sustained investment in important growth opportunities and business diversification. At present, the relevant plan is still being formulated, and it is expected that the main measures will include layoffs.
Shrinking demand for mobile phones
Qualcomm's third quarter profit plummeted by 52%
According to foreign media reports, on August 2nd local time, Qualcomm released its financial report for the third quarter of the 2023 fiscal year as of June 25th. The report shows that Qualcomm's revenue for the third quarter was $8.451 billion, a year-on-year decrease of 23%. The net profit was $1.803 billion, a year-on-year decrease of 52%.
It is understood that currently, Qualcomm's main revenue is contributed by the QCT department, whose main products include chips used in smartphones, cars, and other smart devices. In the third quarter of fiscal year 2023, Qualcomm's QCT division's revenue was $7.174 billion, a decrease of approximately 24% compared to the third quarter of fiscal year 2022. Among them, revenue from mobile chips was $5.26 billion, a decrease of approximately 25% compared to the third quarter of fiscal year 2022.
Layoffs have long been foreshadowed
The company has taken measures to reduce expenses
According to foreign media reports, Qualcomm executives said in a conference call that the decrease in component expenses for smartphones and other electronic products will continue until the end of this year. Qualcomm stated that the company is taking measures to reduce expenses. Qualcomm received $285 million in restructuring expenses in the previous quarter, most of which came from severance pay, and is expected to incur more layoffs.
Qualcomm stated in a statement that it expects sales in the fourth quarter to reach $8.1 billion to $8.9 billion. The midpoint of this range is much lower than the average analyst estimate of $8.79 billion.
This prospect has once again raised concerns about the most severe recession in the smartphone industry in years. Qualcomm and its chip manufacturing peers have found that orders from mobile phone manufacturers have sharply declined, and their inventories have suddenly exceeded demand.
