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QUALCOMM has pledged to cut US$1.4 billion in spending, and lay off parts of its workforce amidst rumours of the company splitting up.
While it is still a leader in semiconductor technology for smartphones, Qualcomm is facing a crisis from multiple fronts: not only is it under investigation in Europe and China for anti-competitive practices, it has lost the majority of Samsung’s business after the South Korean company transitioned to using its own applications processor and radio chips for its Galaxy S6 phones.
Additionally, competitors like MediaTek and Intel are catching up with it in the 4G LTE radio space.
To address these challenges, Qualcomm has announced a strategic realignment plan to improve its performance, and adjust its cost structure. As part of that, Qualcomm has agreed to the demands from activist investor JANA Partners, which has been urging the company to make changes to increase shareholder value, by adding JANA-approved persons to its Board of Directors.
According to a statement by Qualcomm, the cost reductions initiatives include “reductions in headcount and temporary workforce, streamlining the engineering organization, reducing the number of offices and increasing the mix of resources in lower-cost regions.”
Qualcomm is not just cutting costs, but also reviewing alternatives to its corporate and financial structure. This may include “business separation alternatives”, leading to speculation that the company might split up.