Chipmaker Qualcomm (QCOM), which is trapped in the middle of the trade war between China and the US, is slashing headcount in an effort to cut costs. Qualcomm had set a financial target for 2019 during its hostile takeover battle with rival Broadcom (AVGO).
The company had said it expects adjusted EPS of about $6.75 to $7.50 for the next fiscal year. And in order to hit this financial projection, the chipmaker early this year unveiled a $1 billion cost-cutting plan.
Broadcom eventually backed out from the deal after President Trump ordered to block the merger due to national security concerns. But Qualcomm, since then, has been working aggressively to ramp up its operations to boost earnings.
As a part of this new plan, the chipmaker is considering mass layoffs. However, the company did not specify how many jobs — full-time and temporary — are set to be axed. But the layoffs are said to be on a large scale as the company plans to file a WARN (Worker Adjustment and Retraining Notification) notice with the state of California.
Qualcomm said it had evaluated various other strategies to trim costs, but later found job cuts to be crucial to boost long-term growth.
Similarly, in 2015, the company axed around 1,315 jobs as it reduced $1.4 billion in costs. Despite the layoffs, the company’s global workforce remained same at over 33, 000, partly due to the deals it made.
This news comes just days after the US Department of Commerce slapped a seven-year ban on Qualcomm over the sale of components to its major customer ZTE Corp. — a Chinese telecom equipment maker. This ban is said to affect the company’s revenues as it accounts for a major share of semiconductor chips that are used in ZTE smartphones.