Qualcomm laying off about 600 employees globally

Cuts at the mobile-chips giant come as it faces a handful of ongoing government investigations into its business practices.

Ben Fox Rubin Former senior reporter
Ben Fox Rubin was a senior reporter for CNET News in Manhattan, reporting on Amazon, e-commerce and mobile payments. He previously worked as a reporter for The Wall Street Journal and got his start at newspapers in New York, Connecticut and Massachusetts.
Ben Fox Rubin
2 min read

Qualcomm CEO Steve Mollenkopf and his executive team have been working to resolve a yearlong investigation in China. CNET

Qualcomm, the world's largest maker of computer chips for mobile devices, is laying off roughly 600 employees worldwide, as it plans to refocus its business into new areas, a company spokesperson confirmed to CNET on Tuesday.

The layoffs come amid a difficult stretch of regulatory investigations into the company's business practices and Qualcomm's softer-than-expected fiscal outlook for 2015.

The spokesperson said just under 300 employees would be cut in California, where the company has its San Diego headquarters and several other offices. A "similar number" of international employees will also be laid off, the person said. At the end of September, Qualcomm had about 31,300 full-time, part-time and temporary employees, up about 300 from the year earlier, according to regulatory filings. The spokesperson declined to say how many full- or part-time employees would be cut.

"We regularly evaluate our businesses to determine where efficiencies can be obtained and priorities addressed," the spokesperson said in a statement to CNET. "On occasion, that requires we adjust the size or skill mix of our work teams in order to shrink or eliminate some projects and start and grow new projects."

As part of the change, some employees will be moved to other areas of the company, while the rest will receive severance and transition packages. The spokesperson declined to specify what areas of Qualcomm's business would be cut or expanded.

The spokesperson said the layoffs weren't related to investigations into the company going on in China, the US and the European Union, saying instead the change is "focused on specific projects and programs and reflects current business priorities."

Qualcomm has faced some tough challenges this year. Starting in November 2013, the Chinese government opened an investigation into whether the chipmaker violated the country's anti-monopoly laws. The company last month disclosed two more preliminary investigations into its business by the US Federal Trade Commission and EU.

Of those three probes, the Chinese investigation has proven to be the biggest drag on Qualcomm's finances. The investigation, Qualcomm has said, looks of have emboldened several of its licensees to under-report their sales to the company, eating into Qualcomm's royalty payments. That problem has hurt Qualcomm's patent licensing business -- which accounts for about two-thirds of company earnings -- and pushed down the company's overall guidance for its new fiscal year. In the latest quarter, licensing revenue fell 4.9 percent to $1.9 billion, though overall sales still rose.

Company executives have said they plan to take some stronger actions next year to tamp down on the under-reporting, as they also continue to cooperate with Chinese authorities to resolve the investigation.

Qualcomm's stock is down nearly 2 percent in 2014, compared with an 11 percent rise in the S&P 500 index.