Mergers and Layoffs Strike the Semiconductor and Wireless Industries

But engineers shouldn't worry too much

2 min read

Mergers and Layoffs Strike the Semiconductor and Wireless Industries
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A slow-down in the United States’ semiconductor and wireless market is spurring several companies to announce layoffs. It has also led to significant mergers and acquisitions in the past 20 months. This is changing the jobs landscape for engineers but industry insiders aren’t worried.

Cellphone chip market leader Qualcomm on Wednesday announced that it would cut 15% of its workforce, which amounts to over 4,500 people. Microsoft also plans let go of about 7,800 people, many associated with its Lumia cellphone business. And Intel confirmed that layoffs are underway at that company last month.

Among the major M&As in the past two years are: Avago Technologies’ acquisition of Broadcom for $37 billion; Intel’s purchase of Altera Corp for $16.7 billion; and NXP Semiconductor’s buyout of Freescale Semiconductor for $12 billion. Some of these mergers have lead to large job losses.

The slow-down in the semiconductor industry is partly because of a mature market in the U.S., says Will Strauss, president and principal analyst at market research firm Forward Concepts. The U.S. cell-phone market shrank in early 2015 for the first time in six years, he says. “The semiconductor slump will likely be with us for the rest of the year and maybe longer. Everyone has a PC and a phone here already. It’s a saturated market.”

Plus, cellphone chip makers face increasing competition from small Chinese vendors and Taiwan’s MediaTek, which are making chips for low-end phones that are in demand in the booming Asian markets.

It is not clear exactly how many engineers will be on the layoff lists. But, at least for Qualcomm, Strauss believes most layoffs should be in product support sectors rather than the R&D and design centers. “Engineers are the heart of the company,” he says. “Qualcomm has been long criticized by their own stock holders for spending too much on R&D. Any layoffs will be in non-critical areas.”

But even for engineers entering the workforce again, things shouldn’t be too grim. There are plenty of job openings for engineers to fill across the country, and healthy demand for mid-level engineers.

Engineers who take a hit from mergers and layoffs should be able to find jobs at other, perhaps smaller, companies looking for experienced talent, Strauss says. Plus, even as companies layoff people in one business, they might search for engineers in other areas. The 50 or so engineers who will lose their jobs due to LTE modem company Marvell’s closure of their Austin, TX design facility, for instance, should be able to find jobs at Silicon Laboratories, Freescale/NXP and even Qualcomm in that city. The close to 100 engineers laid off at Marvell’s wireless operations in Israel, meanwhile, are finding jobs at Intel and Huawei there.

In a recent Xconomy post, past Qualcomm employee Jeff Belk echoes a similar sentiment, saying that people leaving the company will eventually get back to work, either in other tech firms and even in non-engineering sectors.

They are going to fill much-needed technical and business slots at other established companies in town, not only in wireless, but in application development, Internet of Things, and even find their way into San Diego’s exploding life sciences and genomics sectors. They are going to take “that idea they had” and start banding together, and found new companies in town. They are not done yet.

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