Qualcomm is expected to slash staff as it deals with losses after a 25 percent slump in smartphone chip sales.
Its third-quarter earnings ending June 25 was above market expectations but revealed a 52 percent drop in net income year-on-year, from US$3.730 billion to US$1.803 billion.
The chipmaker has been dependent on iPhone and Android phone sales for revenue and that was down 25 percent to US$5.255 billion, while revenue from Internet Of Things (IoT) related sales dropped almost the same amount, 24 percent.
Automotive segment revenue was the one bright spark, up 13 percent to $434 million, but it’s a smaller source of income.
Qualcomm CEO Cristiano Amon
However, Qualcomm’s fourth-quarter guidance is weak and below Wall Street expectations.
“The midpoint of our fourth quarter fiscal 2023 guidance includes the continued impact of the macroeconomic headwinds, weaker global handset units and channel inventory drawdown,” it warns in its report.
There is another source of upcoming headwinds for Qualcomm with the company itself expecting Apple to start using its own modems in iPhones in 2024. That alone threatens to slash Qualcomm’s handset chip market.
Qualcomm’s share price dropped more than 7 percent to US$120.10 at close on the news.
Chief executive Cristiano Amon told analysts the company would cut its losses. That is expected to manifest as major job cuts.
In a security filings, Qualcomm said: “While we are in the process of developing our plans, we currently expect these actions to consist largely of workforce reductions, and in connection with any such actions we would expect to incur significant additional restructuring charge.”
Qualcomm employs around 51,000 staff.
