Qualcomm layoffs suggest the chips are down for industry

Qualcomm layoffs suggest the chips are down for industry

NEWSBYTE Embattled US chip giant Qualcomm has confirmed in a WARN filing (Worker Adjustment and Retraining Notification) that it is cutting 1,500 jobs in California.

According to Bloomberg, the company will cut 1,231 jobs in San Diego starting in June, along with 269 posts elsewhere in the state.

The move is part of its strategy to take out $1 billion in costs from its business.

It has certainly been a tough week for the company. As the fallout from the blocked Broadcom takeover continues and the trade standoff between China and the US dominates the headlines, Qualcomm has found its proposed $40 billion deal to buy NXP Semiconductors held up by Chinese authorities.

China’s Ministry of Commerce wants Qualcomm to reduce the deal’s negative impact on the market, suggesting that the company’s proposals “hardly solve relevant problems”. Qualcomm resubmitted its application this week.

In the background, Qualcomm is alleged to be fighting battles of a different kind. According to CNBC, former chairman Paul Jacobs, who was ousted from the company in March, is pushing ahead with a strategy to take the company private.

Quoting sources close to the rumoured plan, CNBC said that Jacobs is gathering potential investors, including strategic partners and sovereign wealth funds, to make a fully financed bid in the next two months, and put himself at the helm.

The report suggests that one of the investors to be approached is ARM Holdings, which is the property of Japan’s SoftBank, owner of the Aldebaran and Boston Dynamics robot brands. ARM’s technology is at the core of most processors used in smartphones and tablets, including Qualcomm’s new IoT SoCs.

It has also been a tough week for the semiconductor industry in general – apart from those providers that are IP, rather than product, focused (such as ARM). Facebook has joined the expanding list of companies, including Apple, that want to fabricate their own chips, to retain control of their own technology, processing, and product-development cycles.

Chip maker ASM International reported Q1 earnings in which margins fell and sales disappointed, and Taiwan Semiconductor cut its own guidance, pointing to iPhone sales weakness.

Bank of America Merrill Lynch analysts forecast that overall chip market stock valuations could continue to fall. The SOX chip index is still positive for 2018, but has fallen 11 percent since 12 March, reports Bloomberg. Issues include rough earnings, trade fights, and market volatility.

Meanwhile, Toshiba is still aiming to complete the sale of its memory chip business, reports Seekingalpha, despite rumours that it had decided to cancel the $18.6 billion deal if it did not get approval from Chinese regulators by May.

Internet of Business says

Despite an extraordinary year for US chip giant, Qualcomm, its progress in the Internet of Things continues unabated, as our recent reports (below) reveal. Earlier this month, the company released a new IoT vision-focused System on Chip (SoC), and has also been working in Brazil to help the country roll out its national IoT strategy.