Qualcomm plans job cuts in Shanghai amid U.S.-China tech tensions and economic challenges

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Qualcomm plans job cuts in Shanghai amid U.S.-China tech tensions and economic challenges
Credit: © Reuters.

The US chip giant Qualcomm (NASDAQ: QCOM ) is reportedly planning job cuts at its Shanghai office, amid escalating technology tensions between the US and China, as well as ongoing economic challenges. The company confirmed the layoffs but has not disclosed the exact number of job reductions. This move follows Qualcomm's previously announced expectations of "workforce reductions" in the fourth quarter of fiscal 2023 as part of its restructuring efforts to invest in key growth opportunities.

Despite the layoffs, Qualcomm has denied plans for an office closure or a complete withdrawal from Shanghai, according to China Business News. An anonymous employee also confirmed that the layoffs were underway, but suggested they were not extensive.

The company, which has a presence in over 12 Chinese cities primarily for its semiconductor and mobile telecommunications businesses, has emphasized its commitment to developing advanced technology in China. It is offering generous redundancy packages to affected employees.

Qualcomm's decision comes in the wake of a challenging financial period. In the third quarter of fiscal 2023, it reported a 23% year-on-year drop in revenue and a 52% decline in net income due to weak demand for consumer electronics.

Additional pressure comes from ongoing US-China trade tensions and Beijing’s partial ban on iPhone usage by government staff, as Qualcomm is a major supplier to Apple (NASDAQ: AAPL ). However, the successful launch of the new iPhone 15 in Mainland China could alleviate some of these challenges.

The broader smartphone market in China has also faced difficulties, with a 4% decline in sales during the second quarter of 2023, marking the lowest second-quarter sales since 2014, according to market research firm Counterpoint. Other US chip companies have likewise announced job cuts in China amid these economic challenges and industrial downturns.

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