Qualcomm plans global job cuts, shares fall about 1% before the open
Key Facts
Qualcomm plans to cut jobs worldwide following annual employee performance reviews, according to an internal memo from Chief Executive Cristiano Amon seen by Reuters, which reported the news on October 20, 2026. The move comes as management seeks to address areas where Amon said the company had consistently fallen short of expectations. The chief executive described the measure as a "performance-focused reduction," linking it to building a stronger corporate culture. The memo did not specify how many jobs would be affected across Qualcomm's global operations. Performance is central to the rationale Amon presented to employees, alongside changing business needs as the company expands. Qualcomm did not immediately respond to Reuters' request for comment on the layoffs.
The job-cut plan follows financial results Qualcomm announced on July 29, 2026, for its fiscal third quarter ended June 28, 2026. Revenue for the quarter totaled $9,947 million, according to the earnings release filed with the U.S. Securities and Exchange Commission. Revenue had totaled $10,365 million in the third quarter of fiscal 2025, representing a 4% year-on-year decline in overall sales. In the chip business, revenue totaled about $8,504 million during the same period, according to the segment results table published with the filing. That compared with segment revenue of $8,993 million in the corresponding period of the previous fiscal year. The chip business thus recorded a 5% annual decline, compared with the smaller drop in the company's total revenue.
Financial pressures in the July results extended to the chip business's profitability, with its pretax profit margin falling to 26% in the third quarter of fiscal 2026. The margin had been 30% in the third quarter of fiscal 2025, according to the comparison Qualcomm published in its filing. On costs, Reuters reported in July that the company planned to pass higher input costs on to customers through double-digit price increases. Those plans coincided with changes to Qualcomm's estimates for the size of its Apple phone modem business, according to the agency's report on the financial guidance at the time. The company said its modem share in the next iPhone would be significantly below its previous estimate of 20%. The backdrop to the July results thus included a lower chip business margin, higher input costs and a reduction in the previous estimate for its iPhone modem share.
Despite the overall decline in chip revenue, the Internet of Things business grew during the third quarter of fiscal 2026, according to Qualcomm's filing. Revenue from the business totaled $1,830 million, compared with $1,681 million in the corresponding period of fiscal 2025. The business thus recorded 9% annual growth, moving in the opposite direction to the decline in the company's overall revenue during the same period. But TD Cowen analysts warned in July that Qualcomm's diversification would take time, according to comments reported by Reuters. The analysts specifically noted that the company's initial data center programs carried lower profit margins. In his memo to employees, Amon linked the company's business expansion to changes in the capabilities and skills it needs, placing workforce requirements in the context of that expansion.
As part of its July earnings announcement, Qualcomm issued revenue guidance for the fourth quarter of fiscal 2026 of between $9.7 billion and $10.5 billion. The range formed part of its outlook for the period following the quarter in which sales declined, according to the company's financial filing. When the July guidance was announced, analysts' average estimate for adjusted earnings per share was $2.36, according to data compiled by London Stock Exchange Group and reported by Reuters. The reaction accompanying the job-cut news was a decline of about 1% in Qualcomm shares in premarket trading on October 20, 2026. Reuters reported the share move in its report on the internal memo, while the financial guidance and comparison with analysts' estimates date back to the July announcement.
According to Amon's memo, decisions on job cuts will take business priorities into account when determining which employees will be affected by the global measure. Organizational needs will also be among the considerations informing those decisions. Selection criteria also include the skills required by the business and employees' expertise, according to Reuters' account of the memo. These criteria combine the results of annual performance reviews with work organization requirements under the plan the chief executive presented to employees. Notifications to employees affected by the job cuts will begin in November, according to the timeline in the internal memo.