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Qualcomm is having trouble competing with Intel. That means layoffs in the Triangle.

Qualcomm is laying 241 people off at its design center in Raleigh.
Qualcomm is laying 241 people off at its design center in Raleigh.

Qualcomm says it intends to lay off 241 people who work in a design center near Raleigh-Durham International Airport.

The company sent a Worker Adjustment and Retraining Notification Act to the N.C. Department of Commerce earlier this week, giving the state a required notice of a mass layoff. It said the firings would begin "on or about" Aug. 13.

The notice said the workers aren't members of a union.

Qualcomm's move comes amid multiple reports that the company is either giving up on or scaling back its attempts to design, make and sell processing chips for data-center servers.

Intel dominates that market, and Qualcomm executives have admitted that it's difficult for many potential customers to even consider a move away from Intel's chip architecture.

On Friday, Qualcomm relayed word through its corporate communications office that it is "reducing our investments in the data center business" but isn't abandoning it.

Qualcomm filed its WARN Act layoff notice on June 12, the same day it told officials in California's Employment Development Department it was letting go 26 workers in San Jose and another 17 in San Diego. Those lay offs are also supposed to take effect on or about Aug. 13.

A Bloomberg News report said the three layoffs are related and that Qualcomm is ultimately cutting a third to one-half of the server-chip project's employees.

"A workforce reduction affects not only those employees who are part of the reduction, but their families, co-workers and the community," the company said. "We recognize this and have offered affected employees supportive severance packages to reduce the impact of this transition on them."

Going forward, Qualcomm, which is based in San Diego, will concentrate on large server and cloud-computing providers on the theory they're better equipped to make a switch if they want. It's particularly interested in working with China's major e-commerce, social media, gaming and web-search companies.

Those firms, Alibaba, Tencent and Baidu, are already among the world's largest Internet companies, in large part because of the strength of their position in their home country.

Qualcomm formed a joint venture in 2016 with the government of China's Guizhou province to design, develop and sell "advanced server chipset technology" in China.

The U.S. firm owns 45 percent of the joint venture through a subsidiary, with the province government holding the remaining 55 percent. Qualcomm agreed to license its server-chip technology to the venture.

Meanwhile, Qualcomm promised investors late last year it would cut costs by $1 billion, a move intended to boost the company's short-term profitability and fend off a takeover bid by Singapore-based Broadcom.

The federal government ultimately vetoed the Broadcom deal on national-security grounds, but in April Qualcomm CEO Steve Mollenkopf said his company would continue with the cost-cutting by making "spending reductions in our non-core product areas."

Qualcomm's primary business is making chips for cell phones and other mobile devices, and licensing a large set of patents that are critical to mobile-device networks.

It recorded almost $2.5 billion in net income in its 2016-17 fiscal year. That was down from $5.7 billion the year before, due in part to a patent-and-royalty dispute with Apple that's spawned multiple lawsuits in multiple countries.

Ray Gronberg: 919-419-6648, @rcgronberg





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