Qualcomm Inc. said it expects a reduction in second-quarter earnings from the prior quarter after two South Korean manufacturers requested a partial cancellation or postponement of Application Specific Integrated Circuits orders, said Qualcomm.
The company also concluded that a previously announced $60 million order from Hansol PCS for 1800 MHz Q phones will not be fulfilled following a recent visit to South Korea. Qualcomm did not disclose the companies or values related to the ASICs contracts.
Sales of the Q phone are expected to be lower than planned as a result of the loss of the South Korean order, the delay in introducing the 800 MHz cellular Q phone, and a recent reduction in demand for 1900 MHz personal communications services Q phones.
Qualcomm reduced its manufacturing work force by approximately 700 temporary workers last week, said the company. Qualcomm attributed the reduction to a change in mix between the Q phone, with its higher labor content, and the QCP portable phones, which have lower labor content, as well as cost and manufacturing efficiency improvements.
“We are confident that, despite the current economic turmoil, the Asian markets, including South Korea, represent vibrant long-term opportunities for Qualcomm and [Code Division Multiple Access],” said Irwin Jacobs, chairman and chief executive officer of Qualcomm.
