US-based Qualcomm downsizes staff in Shanghai over China’s dwindling economy

Qualcomm, a major US chip company with a significant presence in China, is reportedly planning job cuts at its Shanghai office. The move comes as the company navigates ongoing technology tensions between the US and China and faces economic challenges. While Qualcomm has confirmed the layoffs in its Shanghai office, it has not disclosed the exact number of job reductions. According to reports in China Business News, Qualcomm has denied that the job cuts will be extensive enough to lead to an office closure or a complete withdrawal from Shanghai. The reports also mentioned that Qualcomm is offering generous redundancy packages to affected employees. A Qualcomm employee in Shanghai, speaking anonymously, confirmed that layoffs were already underway, but the scale of the job cuts appeared to be limited. Qualcomm has a presence in over 12 Chinese cities, primarily for its semiconductor and mobile telecommunications businesses. The company has emphasized its commitment to developing advanced technology in China, particularly in the field of mobile telecommunications. Qualcomm had previously announced its expectation of “workforce reductions” as part of its restructuring efforts to invest in key growth opportunities, citing ongoing macroeconomic and demand uncertainty. The company stated that a significant portion of these changes would occur in the fourth quarter of fiscal 2023. Qualcomm’s revenue and profit have faced challenges due to weak demand for consumer electronics. In the third quarter of fiscal 2023, the company reported a 23 per cent year-on-year drop in revenue and a 52 per cent decline in net income. The US-China trade tensions and Beijing’s partial ban on iPhone usage by government staff may also contribute to pressure on Qualcomm, as it is a major supplier to Apple. However, the successful launch of the new iPhone 15 in mainland China could offset some of these challenges. The overall smartphone market in China has faced headwinds, with a 4 per cent decline in sales during the second quarter of 2023, the lowest second-quarter sales since 2014, according to market research firm Counterpoint. Other US chip companies have also announced job cuts in China amid economic challenges and industrial downturns.