Qualcomm Announces Global 'Performance-Driven Reductions' After Annual Performance Reviews
Qualcomm CEO Cristiano Amon informed employees in an internal memo on Monday that the company will implement global "performance-driven reductions" after the annual performance reviews, aimed at establishing a stronger performance culture and addressing ongoing underperformance.
The memo did not disclose specific numbers or departments affected by the layoffs, with impacted employees to be notified starting in November; the company has approximately 52,000 employees globally as of the end of fiscal year 2025 (usually at the end of September), the vast majority of whom are full-time. Decisions will consider business priorities, organizational needs, employee skills, and expertise.
This arrangement comes as the smartphone chip business faces pressure. In the third quarter of fiscal year 2026 (ending June 28), mobile business revenue was $5.086 billion, a 20% year-on-year decline; total company revenue was $9.947 billion, down 4% year-on-year. Rising memory prices have compressed end-user demand, posing significant external pressure.
Global smartphone shipments fell by about 20% year-on-year in the third quarter, reaching a low point in recent years, as manufacturers passed costs onto consumers, leading to increased retail prices and significant sales contraction. Qualcomm expects that starting in fiscal year 2027, most chip sales will come from non-smartphone businesses.
The company is accelerating its transition to AI data centers, targeting approximately $5 billion in data center revenue by fiscal year 2027 and over $15 billion by fiscal year 2029, with an overall target for non-phone business raised to $40 billion. It has reached multi-generation CPU collaboration with Meta (Dragonfly series) and has made custom chip arrangements with Amazon, also involving clients like Microsoft.
Previously, approximately $97 million in restructuring and severance-related costs were confirmed for the first nine months of fiscal year 2026, primarily from severance costs; an April WARN notice in California covered about 105 positions in San Diego. This global reduction is seen as a continuation of aligning talent with new business needs during the structural transition.
Source: Public Information
ABAB AI Insight
Since taking office, Cristiano Amon has continuously pushed Qualcomm to diversify away from its reliance on mobile chips. There have been layoffs in California around 2023, and from 2024 to 2025, the company plans to enter the automotive and edge computing sectors through acquisitions and product line expansions, while raising non-mobile revenue targets at investor days. Historical patterns show that Amon tends to implement phased reductions in conjunction with shifts in business focus rather than purely for cost-cutting.
Capital is shifting from traditional mobile modems and application processors to data center CPUs, custom silicon, and inference accelerators. The company is binding its design capabilities and potential purchase orders through multi-generation server CPU agreements with Meta, custom chip arrangements with Amazon, and warrant mechanisms, reallocating resources from mobile teams to data center and automotive teams. The motivation is to hedge against market share loss due to Apple's self-developed modems and to capture incremental AI infrastructure demand.
A similar path can be referenced with Intel's major shift to data centers and foundries during its decline in PC processor market share, or AMD's second expansion in graphics and server CPUs. Qualcomm is currently in a transformation phase of "controlling the mobile base while expanding data centers and automotive," with mobile still contributing over half of chip revenue, but management has clearly pointed growth engines towards non-mobile sectors.
This essentially represents a restructuring of the industry chain: rising memory prices and AI capital expenditures have altered semiconductor demand structures, with shrinking mobile shipments and expanding data center demand forcing mobile-centric chip companies to reallocate R&D and manpower. Mechanically, Qualcomm is using performance-driven layoffs to clear positions with low alignment to old businesses while directing engineering resources toward new architectures committed to existing clients, attempting to retain design premiums as pricing power shifts from mobile OEMs to cloud vendors.
ABAB News · Cognitive Law
Old businesses must be cleared for new businesses to take over
Performance layoffs = the cost of structural transition
Rising memory prices, mobile chips yield to data centers