Qualcomm, one of the world’s leading chip manufacturers, has announced plans to lay off more than 1,250 employees in California. This move comes amid declining revenue and profits, prompting the company to optimize costs. It is part of the broader wave of mass layoffs currently sweeping through the tech industry.
1. Qualcomm announces a new round of layoffs affecting over 1,250 employees in California
Qualcomm (NASDAQ: QCOM), one of the world’s leading chip manufacturers, is preparing to lay off more than 1,250 employees in California. This move is part of the company’s cost-cutting strategy in response to a significant decline in revenue and profits.
Over the past two decades, Qualcomm has seen substantial workforce growth, expanding from 6,000 employees in 1996 to 50,000 in 2022—an increase of more than eightfold. However, recent financial downturns have forced the company to adjust its operational strategy.
According to the latest financial report released on November 1, 2023, Qualcomm’s earnings per share (EPS) stood at $2.02, marking a 33% decline compared to the same period last year. The company’s revenue also fell by 22%, highlighting a challenging year. Nevertheless, looking at its long-term trajectory, Qualcomm remains a company with remarkable growth. Between 2012 and 2022, the company increased its global revenue from $19.1 billion to $44.2 billion—an impressive feat in the semiconductor industry.
During the August earnings call, Chief Financial Officer Akash Palkhiwala emphasized that Qualcomm would continue tightening costs until “clear signs of improved business conditions emerge.” This stance was reiterated in the latest earnings report, where the company cited “macroeconomic uncertainty and declining demand” as key factors behind its revenue decline.
To navigate these challenges, Qualcomm has introduced a restructuring plan, with workforce reduction being a key measure to optimize operational costs.
2. Qualcomm’s income forecast
Workforce reductions may help Qualcomm alleviate financial pressure and swiftly improve its profit margins. According to expert forecasts, the company’s earnings per share (EPS) could rise from $2.02 in Q4 2023 to $2.29 in Q1 2024. Although this figure remains significantly lower than the $3+ level seen in 2022, it marks a notable recovery compared to the previous two quarters.
However, in the stock market, QCOM shares are expected to face short-term downward pressure. Projections suggest that the stock price could decline to $100.4 in the first quarter of 2024, representing an approximate 16.5% drop from its current level.
Qualcomm is not alone in this trend, as a wave of workforce reductions is sweeping through the tech industry. Last month, Wells Fargo announced mass layoffs aimed at cutting $10 billion in operating costs. Meanwhile, Meta and Google laid off over 150,000 employees in 2022 and 2023, reflecting the global financial tightening among major tech corporations.
The layoffs highlight the challenges Qualcomm is facing amid economic volatility and declining market demand. While the company is implementing cost-cutting measures, its recovery outlook remains uncertain. Investors will closely monitor Qualcomm’s financial performance and future strategic moves in the coming months.
