Qualcomm to Trim Workforce in Shanghai Amid Declining Smartphone Demand
Key Highlights :
Chipset-making giant Qualcomm has rubbished reports of shutting down its research and development (R&D) unit in Shanghai. However, it has confirmed that it will trim its staff strength on the back of declining smartphone demand and falling economy in China, the media has reported. According to a report by Chinese publication Yicai Global, Qualcomm is not mulling to slash large-scale jobs at its Shanghai facility, which was opened in 2010.
Quualcomm's Shanghai facility employs nearly 400 people. Qualcomm's multi-million dollar R&D centre is situated in the Zhangjiang Hi-Tech Park in Shanghai. It also has an R&D facility in Beijing. The chipmaker, however, noted it will trim its workforce, with the majority of cuts being made this quarter and the rest over the next six months.
According to famed analyst Ming-Chi Kuo of TF International, Qualcomm will slash shipments to China by 50 million to 60 million chips, with Huawei accounting for the majority of the decline. Qualcomm's business in China has been hit by US sanctions that restrict the sale of advanced chips in the country. Qualcomm's key customers such as Huawei have been forced to cut orders in the wake of the US sanctions.
Meanwhile, Apple has recently extended a deal with chipset-making giant Qualcomm for three more years and the latter will provide 5G communication chips to the iPhone maker. The previous deal between Apple and Qualcomm was set to expire later this year. The extension of the agreement is a sign that Apple's efforts to make in-house chips is yet to bear fruit.
Santa Clara, California-headquartered Qualcomm has announced it would supply Apple with the modem chips for smartphone launches in 2024, 2025 and 2026, said a recent report by The Wall Street Journal.
The decline in demand for smartphones due to US sanctions on China and the falling economy in the country has caused Qualcomm to trim its workforce in Shanghai. Qualcomm has rubbished reports of shutting down its R&D unit in the city, but has confirmed that it will be cutting its staff strength. The majority of these cuts are expected to be made this quarter, with the rest over the next six months.
Qualcomm's key customers such as Huawei have been forced to cut orders due to US sanctions, resulting in a decline in shipments to China. Despite this, Apple has extended its deal with Qualcomm for three more years, indicating that its efforts to make in-house chips are yet to bear fruit.
The extension of the agreement between Apple and Qualcomm, as well as the trimming of workforce in Shanghai, are signs that the chipmaker is adapting to the changing environment in order to remain competitive in the market.
