Qualcomm starting new wave of layoffs and outsourcing, says report

25 September 2018 Consulting.us 3 min. read
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According to a report from Android Headlines, mobile chipset maker Qualcomm is launching a new wave of layoffs and outsourcing. The firm has been utilizing management consultancy The Boston Consulting Group for strategic advisory services since at least 2015.

A new wave of layoffs and outsourcing initiatives is ramping up at San Diego-based semiconductor and telecom equipment firm Qualcomm – which makes most of its money from smartphone processor chips and technology. According to Android Headlines, users on thelayoff.com are reporting job cuts across the company. “Lots of US positions moving to India,” wrote one source on the site. “BCG recommends layoffs,” wrote another. The cuts are expected to be made official by the end of the year.

The Boston Consulting Group (BCG) has been on Qualcomm’s retainer since at least 2015, according to the computer chip maker. The management consultancy is likely advising the tech giant – which has over 30,000 employees and $22 billion in annual revenues – on how to cut costs, become leaner, and more effective. The negative part of that, though, is layoffs and outsourcing.

Qualcomm laid off about 1,500 jobs in San Diego after a failed hostile takeover bid by rival US chip maker Broadcom earlier this year. The takeover bid was blocked by President Trump on grounds of national security. The layoffs started in June as part of an effort to cut spending by $1 billion due to declining sales.Qualcomm starting new wave of layoffs and outsourcing, says reportPreviously, Qualcomm cut 4,700 jobs in the summer of 2015 in the wake of pressure from antitrust investigations in the EU, US, and China, as well as from the poor performance of its Snapdragon 810 and 808 64-bit smartphone chips.

Last year, Apple stopped paying billions for licensing fees for the swath of wireless patents that Qualcomm owns, locking the two in a heavyweight legal battle. Apple was emboldened by South Korean regulators fining Qualcomm 1.03 trillion won in late 2016 for licensing too many patents, essentially forcing smartphone makers to pay royalties for patents they might not even require. In January 2017, the FTC also charged Qualcomm with monopolizing a key semiconductor device in cellphones, hampering competitors and threatening mobile innovation.

The firm faced more bad news this year when its proposed $44 billion acquisition of Netherlands-based near-field communications (NFC) pioneer NXP Semiconductors fell apart. The deal’s collapse was worrying to investors and analysts, since Qualcomm hyped the transaction for almost two years as its longer-term plan for diversification and sustainability.

Meanwhile, Qualcomm faces the possibility of another takeover attempt from its former executive chairman, Paul Jacobs, who was ousted after the failure of the Broadcom bid. Jacobs has stated he is raising money to take the company private.

In the meantime, Qualcomm’s CEO through the turbulent past four-and-a-half years, Steve Mollenkopf, is expected to get a pay raise for a job well done. Despite the anti-trust suits and failed transactions, the company’s share prices rose more than 15% this year. Mollenkopf’s compensation package, valued at about $15 million, is currently below that of comparable firm CEOs at Intel and Nvidia, who receive between $19 million-$25 million annually. 

Mollenkopf expects that Qualcomm’s growth will continue to come from the mobile industry, which is preparing for a transition to 5G technology next year. Meanwhile, the firm says it will generate $5 billion from markets other than mobile in 2018.