Will Kessler
Daily Caller News Foundation
Top semiconductor manufacturer Qualcomm announced a new round of layoffs on Wednesday, even after the industry received huge subsidies from the Biden administration, according to The Wall Street Journal.
Qualcomm, a major American producer of semiconductors, announced a new round of layoffs after seeing a 25% decline in its mobile-phone chip business compared to the previous year, according to the WSJ. The semiconductor industry has received huge subsidies from the Biden administration through the CHIPS and Science Act, which was signed into law in August 2022 and included $52 billion in subsidies for domestic semiconductor manufacturers. (RELATED: China Implements Export Controls On Key Metals Used For Chips)
“We had previously communicated we would evaluate additional cost actions as the environment continues to evolve,” Qualcomm CFO Akash Palkiwala said in an earnings call following the announcement. “Until we see sustained signs of improving fundamentals, our operating framework does not assume an immediate recovery. Given our commitment to operating discipline, we will proactively implement additional cost actions in the first half of fiscal ’24. This will be incremental to the reductions we have successfully completed in fiscal ’23.”
The disappointing earnings are part of stagnating smartphone sales from recent quarters, with a 7.8% fall for the year in the second quarter, according to the WSJ. The company had 51,000 employees in Sept. 2022 and did not specify how many it plans to lay off, but did say that layoffs will be a large part of the planned cost-cutting measures.
Revenues for the third quarter of 2023 fell 23% as compared to last year, from around $10.9 billion in the third quarter of 2022 to approximately $8.5 billion in the third quarter of 2023, according to Qualcomm’s third quarter earnings report.
Qualcomm stock drops 9% as phone chip sales dive https://t.co/M8udugbRzc
— CNBC (@CNBC) August 3, 2023
The U.S. is in a trade war with China over the production of semiconductor technology, with both countries vying for an advantage in the technology due to its uses in computing and artificial intelligence development. In October 2022, the Biden administration imposed restrictions blacklisting multiple Chinese companies from purchasing semiconductors and the materials used to make them from U.S. companies.
Chip industry leaders Intel, Qualcomm and Nvidia quietly met with Biden administration officials in July to discuss possible restrictions on the chip industry related to China.
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Ambassador Xie Feng of China said at the Aspen Security Forum in July that China will respond to any new restrictions with actions of its own.
Qualcomm did not immediately respond to the Daily Caller News Foundation’s request for comment.
This story originally was published by the Daily Caller News Foundation.
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