Qualcomm Cuts Jobs as It Seeks Chinese Approval for NXP M&A
Qualcomm is laying off 1,500 employees as part of a plan to cut $1 billion in costs from its balance sheet, as it also tries to gain Chinese regulatory approval for its delayed $44 billion acquisition of NXP Semiconductors.
The San Deigo-based company has begun to cut 1,500 jobs, over 4% of its 34,000 global workforce -- mainly in California, according to Bloomberg, who originally reported the story. Qualcomm originally announced the cost-cutting plan as part of a promise to shareholders in January, as part of its battle to the stop the eventually unsuccessful bid to buy Qualcomm by Broadcom Corp. (Nasdaq: BRCM) The $117 billion bid was eventually blocked by the Trump administration in March. (See Trump Blocks Broadcom's Qualcomm Acquisition .)
"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," a Qualcomm spokesperson told Light Reading on Thursday, saying the chipmaker will offer employees affected "supportive severance packages."
No word yet on whether the cuts will come mainly among management, engineers, or other types of employees.
Meanwhile, Qualcomm also said Thursday that it has refiled for Chinese regulatory approval of the acquisition of NXP and reset the date for the proposed closure of the $44 billion deal, amid a background of increasing trade tensions between the US and China.
In a statement, Qualcomm Inc. (Nasdaq: QCOM) said it has extended the date for proposed closure of the deal until July 25, 11:59 p.m. EST. If it doesn't get approval from the Chinese Ministry of Commerce (Mofcom) by then, it has reiterated that it will pay a $2 billion termination fee to NXP Semiconductors N.V. (Nasdaq: NXPI).
Qualcomm's bid for NXP -- originally made in October 2016 -- is part of a strategy to expand into new markets. These will include the connected car and Internet of Things (IoT) machine communications market. Qualcomm upped its offer for NXP from $39 billion to $44 billion (See Qualcomm Makes $39B Bet on NXP and Qualcomm Ups NXP Bid, Angers Broadcom.)
Now, however, Qualcomm's drawn-out NXP bid could be affected by increased trade tension between the US and China. In March, President Trump has threatened China with $150 billion in trade tariffs, and the Chinese government has said it will retaliate across a wide range of American goods. (See Trade Warmonger Trump May Slap Tariffs on Chinese Tech – Reuters.)
Qualcomm shares were down $2.30 at $52.99 in Thursday morning trading on the news.
— Dan Jones, Mobile Editor, Light Reading