Qualcomm, the world’s largest mobile chip maker, is laying off workers due to weak demand for its products. The company will lay off 1,258 people in San Diego and Santa Clara, California, starting December 13. Approximately 2.5% of Qualcomm’s workforce was laid off. The company’s engineering department has more than 750 reduced positions, from managers to technicians.

Qualcomm said the layoffs were necessary to “continue to invest in significant growth and diversification opportunities” in an uncertain macroeconomic and demand environment. The company’s revenue is expected to fall 19% this fiscal year, despite CEO Cristiano Amon’s efforts to diversify its products. Qualcomm’s main revenue comes from the mobile phone market, which is still not recovering as quickly as expected.

In fact, a report published last month stated that Huawei plans to fully adopt its new in-house Kirin processors from 2024. This move will affect chipmaker Qualcomm the most.

According to industry analyst Ming-Chi Kuo, this move will not only lead to Qualcomm losing Huawei orders altogether starting in 2024, but “will also face the risk of reduced supplies to non-Huawei Chinese customers due to competition from Huawei.” For reference, Huawei purchased 23-25 ​​million and 40-42 million mobile phone SoCs from Qualcomm in 2022 and 2023 respectively.

Qualcomm also faces competition from Samsung and Apple, which are developing their own mobile phone chips.

Layoffs at Qualcomm are the latest sign of a slowdown in the tech industry. Other tech giants like Meta and Twitter have also announced layoffs in recent months. The slowdown is due to a number of factors, including rising inflation and disruptions in supply chains.