Qualcomm to cut 1,500 jobs, mostly in California, to cut costs

Qalcomm, the big chip maker for smart phones, has already begun to cut jobs in California. The move appears to be part of a much larger workforce reduction plan that is designed to meet a commitment made to investors to cut $1 billion in costs.

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Most job cuts will be in California

However, one person said that some jobs will be eliminated in other areas as well. In an emailed statement the company confirmed that it was reducing both full time and temporary workers but they did not specify the exact numbers or locations.

In the statement the company said:“We first evaluated non-headcount expense reductions, but we concluded that a workforce reduction is needed to support long-term growth and success, which will ultimately benefit all our stakeholders.” Severance pay will be offered to those affected.

Qualcomm

Qualcomm is a US-based multinational corporation producing semiconductor and telecommunications equipment. It designs and markets wireless communications products and services. It derives the largest part of its revenue from making chips and much of its profits come from patent licencing. Although it has headquarters in San Diego California it has 224 locations throughout the world. Their website is here. It had 33,800 employees as of 2017.

The promise to investors

In January, Qualcomm promised that it would cut $1 billion in expenses so as to improve earnings. This was part of the efforts of the company to block a hostile takeover bid from its rival Broadcom INc. Although shareholders were set to accept the offer and ignore the promise, the Trump administration stopped the deal on the grounds that it would pose a national security risk. However, the company is still expected to live up to its promise of savings.

Dismal sales and earlier cuts

Qualcomm's sales fell every year since 2015. In fiscal 2018 they are expected to decline by 3 percent.

In 2015 in response to pressure from an activist investor Qualcomm restructured resulting in thousands of workers being laid off.

The precise numbers of the latest reduction should be made clear within the next few days as the company must file Worker Adjustment and Retraining Notifications. Companies are required to file these so-called Warn notices when they let go of 50 or more employees within a 30 day period.

This January Qualcomm was fined $1.2 billion by the European Union for violating anti-trust laws in deals it made with Apple.

Previously published in Digital Journal

President Trump bans purchase of Qualcomm by Broadcomm

The decision to ban any takeover by Singapore's Broadcom of the U.S. chipmaker Qualcomm may signal a shift toward stronger control and oversight of the technology of the telecom and wireless area.

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In line with Trump's America First policy, Trump no doubt wants to ensure that control of advanced technology in the area is kept out of the hands of foreign competitors such as China. Some U.S. officials had warned that the $117 billion buyout could involve ceding control of the wireless and telecom infrastructure to foreign countries such as China.

U.S. wants America to be first in technology in the area

Jon Erensen, research director for semiconductors at Gartner said: “These transitions come along almost every decade or so, moving to a new iteration of technology. The government is being very careful to ensure the U.S. keeps its leadership role developing these standards.”

Trump said in announcing the ban that allowing the takeover of Qualcomm would be a danger to U.S. national security.

Qualcomm

Qualcomm, with headquarters in San Diego California, may not be that widely known but it is an important U.S.-based multinational semiconductor and telecommunications company. It designs and markets telecommunications products and services. Much of its revenue comes from chipmaking but most of its profits come from its patent licensing businesses. The company has 224 locations worldwide.

Qualcomm makes many of the processors that power smartphones as well as other mobile devices. The company also owns patents and key pieces of technology that Apple as well as other companies use in their products.

Qualcomm has been a leader in the broadband cellular network technologies such as 3G and 4G. It has invested a great deal of time and money in the coming 5 G technology.

Worries about China gaining leadership in advanced 5G technology

Erensen said that China is playing a larger role in developing standards and there has been considerable consolidation in the industry. Development is in fewer hands while the stakes are growing. Some industry analysts suggest that the government blocked the deal because of Qualcomm's advanced work on the 5G system.

The Committee on Foreign Investment in the United States(CFIUS), a body that reviews national security implications of foreign investments in U.S. companies said that they were concerned about Broadcom's policy of cutting costs. The Committee thought that this might have the effect of Qualcomm being less of a leader in the area. This fits in with Trump's policy of ensuring that America is first.

If the merged company shows less leadership, a Chinese company such as Huawei, that CFIUS has in the past expressed concern about, could become dominant in 5G technology and standards, a situation that the U.S. wants to prevent. This provides a main reason not to allow the merger.

Stacy Rasgon, a chip analyst at Bernstein summed up the argument: "The case that has been constructed is that, given Broadcom's business practices, the worry is that they will cut investment significantly, particularly in the 5G roadmap, weaken Qualcomm, as well as the U.S. position and allow Huawei, a Chinese company to take the lead."

Brian Fleming, an attorney and former counsel at the national security division of the Justice Department said: “Over time that would mean U.S. government and U.S. technology companies could lose a trusted U.S. supplier that does not present same national security counter intelligence risk that a Chinese supplier does. They honestly believe they are helping to protect national security by doing this."

While blocking the deal may slow down Chinese efforts in the area, the Chinese may still dominate if they are willing to invest heavily in the area.

Broadcom may decide not to move to the U.S.

Given that Broadcom will not be allowed to buy Qualcomm, it might very well reconsider moving its headquarters from SIngapore where it is now to the U.S. This may mean that the U.S. is losing potential jobs as a result of its decision.

There is another recent article in the Digital Journal that reports on Trump's decision.

Previously published in Digital Journal

Qualcomm beats analysts' earnings and revenue estimates in 3rd quarter

US-based giant telecommunication equipment and chip maker Qualcomm has managed to beat analysts' revenue and earnings estimates in its fourth quarter, in spite of a year-long legal battle with Apple.

Qualcomm racked up $5.96 billion in sales or 92 cents per share contrasted with expectations of $5.8 billion and 81 cents per share. The economics of the chip business is improving.

Shares in Qualcomm rose 54 cents or one percent to $54 dollars in after hours trading. In the year-ago quarter, the chipmaker reported earnings per share of $1.07 on $6.2 billion in revenue.

Positive news about Qualcomm also included the recent announcement that there will be Microsoft laptops powered by the company's Snapdragon 385.

The legal battle with Apple was outweighed by the strength of its business with Android handset makers such as Samsung, Alphabet, LG, and Xiaomi.

Looking forward to 2018, Qualcomm sees sales being buoyed by its increasing penetration of the 3G and 4G market, as well as growth in both the area of handset and Internet of Things (Iot) markets, according to the CEO Steve Mollenkopf.

Qualcomm's improved numbers was in large part due to the company's growth in China.

Mollenkopf said that as new technology rolled out such as 5G connectivity, the company was well placed to win a significant share of the new markets: “We are very excited about the increased momentum of 5G around the world."

Qualcomm law suits

In April Apple sued Qualcomm for about $1 billion last January, for charging a heft fee for using technologies claims Apple maintains Qualcomm should not be associated with. Apple also claimed Qualcomm owed it payments.

The issue is that Qualcomm charges a percentage of the total price of iPhones and other Apple products as a a fee for using some Qualcomm patents. Qualcomm has counter-sued, claiming patent infringement. In July, Qualcomm asked U.S. trade regulators to halt the sale of imported iPhone and iPads in the United States. Qualcomm alleges that technology purchased by Apple from its rival Intel violated six of Qualcomm's patents.

The US Federal Trade Commission filed an anti-trust lawsuit against Qualcomm, also in January, for charging high fees for the use of its technologies using the fact that it was the leading supplier in the industry.

Qualcomm had already been fined $774 million by the Taiwanese regulatory agency for violation of anti-trust regulations in a ruling last October that Qualcomm said it would appeal. South Korea also fined the company $854 million for anti-competitive practices. China fined the company $975 million back in 2015.

The legal fracas with Apple and other law suits have taken their toll on Qualcomm's share price that has dropped over the year by more than 18 percent. Apple has designed iPhones and iPads that will no longer use Qualcomm chips, according to Reuters, citing two people familiar with the matter

Acquisition of NXP

A bright spot for Qualcomm is its recent approval by the US government of its $47 billon bid for NXP that manufactures semi-conductors. Earlier, NXP's management said Qualcomm's $110 per share offer was a good deal for its shareholders. The deal is expected to be wrapped up by early 2018.

The acquisition should put Qualcomm in a good position to compete with rival chip makers Nividia and Intel in the growing market demand for new automotive technologies, as well as technology for smart homes and manufacturing.

Qualcomm's headquarters are in San Diego California.

New Microsoft laptops will run on Qualcomm chipset

Microsoft revealed new details about its ARM-powered Windows 10 laptops. The laptops will be powered by a Qualcomm chip rather than by Intel or AMD. The new laptops should be on the market by this December.

Asus, HP, and Lenovo who all make laptops are also preparing new devices. Battery life appears to be a key selling point for the new laptops. ARM, originally Acorn RISC Machine but now Advanced RISC Machine is reduced instruction set computing (RISC) architecture for computer processors.

The U.K. company ARM Holdings develops the architecture and then licences it to other companies who design their own products that implement the architectures including systems-on-chips(SoC) and systems-on-modules (SoM). The firm also designs cores to implement designs that are licenced to companies to incorporate into their products. As of 2017 ARM was the most widely used instruction set architecture in terms of number produced at over 100 billion.

The laptops will run on the Snapdragon 835 chipset, the same mobile processor that is now used in many phones such as the Samsung Galaxy S8 and LG V30. Qualcomm claims of the chipset: " The Qualcomm Snapdragon 835 mobile platform can support phenomenal mobile performance. It is 35 percent smaller and uses 25 percent less power than previous designs, and is engineered to deliver exceptionally long battery life, lifelike VR and AR experiences, cutting-edge camera capabilities and Gigabit Class download speeds."

Qualcomm is a US-based multinational semiconductor and telecommunications equipment company. It designs and markets wireless telecommunications products and services. Most of its revenue comes from chipmaking and its profit from patent licensing. The company has headquarters in San Diego California but 224 different locations worldwide.

A battery life that dreams are made of

Pete Bernard a Microsoft program manager claimed that the laptop would have a multi-day battery life: “To be frank, it’s actually beyond our expectations. We set a high bar for [our developers], and we’re now beyond that. It’s the kind of battery life where I use it on a daily basis. I don’t take my charger with me. I may charge it every couple of days or so. It’s that kind of battery life.”

Microsoft hopes that the new laptops will not have the issues that emerged when Microsoft used ARM with Windows earlier: "Microsoft previously promised great battery life with ARM-powered Windows RT devices, but that largely fell short. RT was a messy and confusing experiment that included a desktop mode that couldn’t run traditional desktop apps, and Microsoft will be keen to avoid any issues again." The new laptop will be able to run traditional desktop apps as shown on the appended video.

Holiday release

The new laptop should be out by Christmas this year. Don McGuire VP of Global Product Marketing at Qualcomm said: “In December last year, [we] set a timeline for one year out, that we would be able to announce devices. We are still moving towards that timeline. I think that expectation will be met. You’ll be hearing more from us over the next coming weeks regarding that.”

Hundreds of the new Snapdragon-powered laptops are being tested at Microsoft headquarters. Pete Bernard of Microsoft said that his group had been working on the project for almost a year and were working furiously both at Redmond and with partners at Qualcomm in San Diego in California. In time, there may be cheaper versions of the laptops.

Bernard said: “Over time, there’s going to be a portfolio of devices from manufacturers. We’ve had some conversations with other OEMs too, for future devices, that are very exciting about bringing their own spin.” Bernard said that eventually there will be a range of different devices with varying prices. While it is claimed that the new laptop will be a game changer, it remains to be seen how the laptop will sell and if it meets stiff competition from other manufacturers.