Qualcomm mulls business split amid layoffs

Ramp-up in competition drives chipmaker to examine future

Tags: QUALCOMM IncorporatedUSA
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Qualcomm mulls business split amid layoffs
By  Stephen McBride Published  July 23, 2015

Mobile chipmaker Qualcomm is considering splitting off business units as part of a cost-cutting exercise that includes around 4,500 job losses, Reuters reported.

The company made the announcement following its third profit warning this year, stemming from stiffer competition in the mobile system-on-a-chip space.

In a struggle to stabilise shareholder returns, Qualcomm earlier this week announced it would shed 15% of its workforce in a bid to cut its costs by $1.4bn. The company's stock price fell 1.8% to $63.05 yesterday, in after-hours trading.

"We decided we were going to take a fresh look at the corporate structure of the company," Qualcomm president Derek Aberle said in an interview. "The environment is constantly changing so... earlier [analysis] may not be valid anymore."

Qualcomm is best known for its Snapdragon processor used in premium handsets made by Samsung, HTC and ZTE. As the premium market has stagnated and emerging economies have demanded cheaper smartphones, Qualcomm has faced stiff competition from Taiwan's MediaTek, which is adept at mass-producing chips that have already been bench-tested against other hardware components. This allows vendors to bring new models to market more quickly and at lower price points than if they incorporate Qualcomm chips.

In a further blow to Qualcomm, Samsung chose to develop its own processor for the Galaxy S6 line, where it had previously used the Snapdragon range.

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