Smartphone chipmaker Qualcomm Inc., which reported an alarming 46 percent drop in second-quarter profit in April, is said to be contemplating a sweeping restructuring of its business that could lead to layoffs and maybe even a breakup of its businesses.

The report comes by way of Reuters and The Wall Street Journal, citing a report in The Information that claims Qualcomm will conduct a sweeping strategic review following pressure from an activist investor, and could layoff as much as 10 percent of its 30,000 strong workforce.

Qualcomm’s is due to report its latest financial quarter this Thursday, and the publications say the company is unlikely to hit its targets. Moreover, the company was recently hit with the news that its biggest customer, Samsung Electronics Co., Ltd., has decided to drop Qualcomm’s chips and use its own processors in its new Galaxy S6 line.

Qualcomm has been suffering from what The Information calls “smartphone fatigue”. A recent report by Argus Insights Inc. backs this up, noting that demand for smartphones in the U.S. was down 8 percent in June 2015, compared to the previous year.

Besides the depressed smartphone market, Qualcomm is facing increased competition from rivals like MediaTek Inc. It’s enough to motivate activist shareholder Jana Partners to take action. Jana, which is more or less following the playbook created by Carl Icahn, has been pushing for Qualcomm to buy back more shares, pay more in dividends, maximize shareholder value and potentially even split itself up.

Now, The Information says Qualcomm might be about to comply, saying the obvious move would be to split its processor business apart from its patent unit. That’s because Qualcomm’s patents accumulate the bulk of the company’s profits, while its processors pull in most of its revenue. Patent revenues are essentially free money, flowing straight into the company’s coffers, while processors require a lot of capital expenditure. The only problem with this plan is that most of Qualcomm’s patents cover CDMA technology, which is slowly but surely being edged out by LTE. The threat is considerable enough that Qualcomm felt compelled to note this risk in its most recent regulatory filing.

Of course it’s far from clear that rejigging its business would guarantee any better returns. The company is facing the reality of lower than expected handset shipments, faces an investigation by the European Union, and has just settled a costly case with China. While a breakup could deliver more value, the company could also suffer from the distraction any reorganization would cause.

Image credit: DasWortgewand via Pixabay.com