Qualcomm, the world’s largest mobile chipmaker, is laying off employees in response to sluggish demand for its products. The company will eliminate 1,258 positions in San Diego and Santa Clara, California, effective December 13.

The layoffs represent about 2.5% of Qualcomm’s workforce. More than 750 of the positions being cut are in the company’s engineering department, with positions ranging from directors to technicians.

Qualcomm said the layoffs are necessary to “continue investing in key growth and diversification opportunities” in an uncertain macroeconomic and demand environment.

The company’s revenue is expected to shrink by 19% this fiscal year, despite CEO Cristiano Amon’s efforts to diversify its products. Qualcomm’s main revenue still comes from the mobile phone market, which is not rebounding as quickly as expected.

In fact, a report last month suggested that Huawei is planning to fully adopt the new self-developed Kirin processors starting in 2024, a move that will hurt chip-maker Qualcomm the most.

According to industry analyst Ming-Chi Kuo, with this move, Qualcomm will not only lose Huawei’s orders completely from 2024 onwards “but also face the risk of a decline in shipments to non-Huawei Chinese brand clients due to the competition from Huawei”.  For reference, Huawei purchased 23-25 million and 40-42 million mobile phone SoCs from Qualcomm in 2022 and 2023, respectively.

Qualcomm is also facing competition from Samsung and Apple, which are developing their own mobile phone chips.

The layoffs at Qualcomm are the latest sign of a slowdown in the tech industry. In recent months, other tech giants such as Meta and Twitter have also announced layoffs. The slowdown is due to a number of factors, including rising inflation, and supply chain disruptions. 

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