Qualcomm to make $1.4 billion in cuts, restructure board after disappointing year

Qualcomm, the company behind the all-conquering Snapdragon processors, said today that it will cut $1.4 billion in costs and restructure its board after being pressured by an activist investor to make changes. The move could see the chip-maker cut thousands of jobs as it seeks to streamline its operations. Qualcomm’s revenue is significantly lower than it was 12 months ago, and its chip business isn’t the powerhouse it used to be.

Although it didn’t state specifically where it was going to make cuts, the company has confirmed that there will be job losses. Up to 15% of its workforce could face redundancy. This decision was made after it agreed to a deal with Jana Partners (the activist investor) to not only cut costs but also make changes to the board of directors.

Mark McLaughlin (Palo Alto Networks CEO) and Tony Vinciquerra (former Fox exec) will be joining as outside directors — alongside one other — while two of its current directors will retire, and two more will step down.

“We are making fundamental changes to position Qualcomm for improved execution, financial and operating performance,” CEO Steve Mollenkopf said in a statement. “We are right-sizing our cost structure and focusing our investments around the highest return opportunities while reaffirming our intent to return significant capital to stockholders and refreshing our Board of Directors.”

It’s no secret that the past year has been challenging for Qualcomm. For years in the smartphone market most of the biggest smartphone manufacturers relied on the company for its Snapdragon processors. The competitive landscape has changed recently, and we’re now seeing more companies opting for other silicone in their handsets. Samsung — as an example — now uses its own Exynos chips for its flagship devices, and will do so again with the Note 5 and S6 Edge Plus later this year (if rumors are to be believed). What’s more, rising Chinese manufacturers are also opting for other chipsets.

The Chinese chip manufacturers are starting to close in on the low-end of the market, while Samsung is challenging at the hight end. Of course, it doesn’t help that Qualcomm’s latest process — the Snapdragon 810 — has been a cause of controversy with its overheating issues.

While Qualcomm’s days of seemingly owning the monopoly on the Android smartphone processor market are well over, it should still have enough business to keep going successfully. Its Quick-Charge technology is being used on an increasing number of devices, and it has plenty of stake in the radio chip business, developing processors with more advanced LTE capabilities.