Qualcomm is planning to reduce its workforce at its Shanghai office due to the ongoing technology tensions between the United States and China, as well as economic challenges. This information comes from a local media report.
Qualcomm, a prominent American company with a significant presence in China, announced on Thursday that layoffs would occur at its Shanghai office, although the exact number was not specified. The report, published by China Business News, a local Shanghai newspaper, conveyed this news.
The China Business News report stated that Qualcomm denied rumors of these job cuts being on a “large-scale” level, and it clarified that these actions would not lead to an “office closure” or a complete “retreat from Shanghai.”
This report from China Business News came after claims circulated on Chinese social media platforms suggesting that Qualcomm was terminating numerous employees from its research and development facility in Shanghai, a significant financial and technological hub on the Chinese mainland. Additionally, it was rumored that the company was offering generous severance packages to those affected.
An anonymous Qualcomm employee based in Shanghai, who preferred not to disclose their identity due to the sensitivity of the situation, informed the South China Morning Post on Thursday that layoffs were already underway. Some employees had received compensation offers, but the extent of the job cuts appeared to be relatively limited.
Qualcomm maintains a presence in over 12 Chinese cities, primarily for its semiconductor and mobile telecommunications operations. The company’s official website emphasizes its commitment to “developing the world’s most advanced technology in China, particularly in the field of mobile telecommunications.”
In an August stock exchange filing regarding its quarterly revenue, Qualcomm indicated its anticipation of “workforce reductions” as part of its broader “additional restructuring actions” aimed at facilitating ongoing investments in key growth areas and diversification opportunities. This decision was made in light of persistent macroeconomic uncertainties and fluctuating demand in the market.
The company from the United States further specified that a significant portion of these adjustments would be implemented in the fourth quarter of fiscal year 2023.
Qualcomm has experienced a decline in both revenue and profit due to weakened demand for consumer electronics. In the three months ending on June 25, the company reported a 23 percent year-on-year decrease in revenue to $8.45 billion, while net income plummeted by 52 percent to $1.8 billion.
Qualcomm, a key supplier to Apple, may also encounter challenges due to Beijing’s partial restriction on government staff’s use of iPhones. However, the successful launch of the new iPhone 15 in mainland China might help offset these challenges.
In the second quarter of 2023, smartphone sales in China dropped by 4 percent compared to the previous year, as economic difficulties affected consumer confidence. This decline marked the lowest second-quarter sales figure since 2014, as per data from the market research firm Counterpoint.
Other U.S. chip companies have also been downsizing their workforce in China. In March, Marvell Technology, headquartered in California, announced the layoff of its entire research and development team in mainland China, citing an industrial downturn. This decision came approximately five months after the company initiated job cuts as part of its efforts to streamline its operations in the country.
(Source: China Business News | Ann Cao | South China Morning Post)
