In a recent turn of events, Qualcomm has started trimming its workforce at its Shanghai office, according to a local report by China Business News. While the U.S.-based chip behemoth didn’t specify the number of layoffs, it dismissed speculation of a large-scale office closure or full exit from Shanghai.

Qualcomm states that the company will now focus on Key Growth & Diversification

The move comes as the company grapples with deteriorating U.S.-China technology relations and economic uncertainties. Interestingly, Qualcomm has substantial operations in China, with offices across 12 cities. The layoffs also come in the backdrop of weakened demand in consumer electronics that caused a revenue slump of 23% year-over-year to $8.45 billion for the three months ending June 25.

qualcomm

An anonymous employee stated that layoffs have begun, but their scale remains limited. The move seems to be a part of the company’s broader restructuring strategy, as revealed in its August stock exchange filing. Qualcomm plans to focus on “key growth and diversification opportunities,” despite the prevailing macroeconomic headwinds and demand fluctuations. It also anticipates that most of these changes will materialize in the fourth quarter of 2023.

Qualcomm’s operations in China are particularly noteworthy because it plays a significant role in developing mobile telecom technology in the country. Moreover, Qualcomm is a key Apple supplier, and the brand’s iPhone 15 launch in mainland China could provide a slight offset to some challenges faced by the company.

The situation echoes the broader trend among U.S. chip companies in China, such as Marvell Technology, which also cut its research and development team earlier this year due to an industrial downturn. China’s smartphone market itself is witnessing a contraction, as data from Counterpoint indicates a 4% year-over-year drop in smartphone sales in the second quarter of 2023—the lowest since 2014.

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