August 03, 2015, anysilicon
The American global semiconductor company QUALCOMM has confirmed the rumors that 4,500 employees will lose they jobs for the sake of a more competitive presence on the global market.
Indeed, the tough decision of cutting down the company’s costs by reducing its full-time staff of 15% (for the value of $1.4 billion), was taken after facing a third profit warning notice due to a rising number of newcomers from Asia pressuring the chip world market.
However, there is more than a single restructuring decision that the company is fronting. As a matter of fact, QUALCOMM recently announced, also, to have entered in agreement with the activist hedge fund Jana Partners who is apparently pushing the company to part the business in 2 areas of competence. They are asking QUALCOMM to spin off the non profitable chip manufacture business from the more remunerative patent-licensing income. The reason behind this pretentious stakeholder’s request is that the chip industry is currently under the attack of Chinese and Indians manufacturers of low cost smartphones (like MediaTek and Spreadtrum Communications). These companies have rapidly eaten the high-end chip market-share held by QUALCOMM, bringing the company to register the inevitable losses.
“We are making fundamental changes to position Qualcomm for improved execution, financial and operating performance,” said Steve Mollenkopf, CEO of Qualcomm.
In order to wisely decide if breaking the company in two will be the strategical decision to pursue, QUALCOMM added two outside directors to its board. Moreover, given the dark scenario prospecting the near future, the company, in addition to the already decided downsizing of its workforce, plans also a reduction of the number of offices and a cutting of the executives’ payroll.