Recently, China’s TP-Link brand has come under national security scrutiny in the United States, leading its subsidiary, Lianzhou International, to execute a significant round of layoffs at its Zhangjiang base in Shanghai, nearly shuttering the entire Wi-Fi chip division. This entire process unfolded in just half a day, with severance conditions set at N+3, notably higher than China’s statutory standards. This decision has sparked speculation within the industry that TP-Link has seemingly halted its research and development plans for Wi-Fi front-end modules, while still maintaining some market presence.
Several employees with knowledge of the situation have reported that the layoffs at Lianzhou International came as quite a surprise, with just a few hours passing from the time of notification to the completion of the exit procedures. During a meeting, the company’s management indicated that the future Wi-Fi chip team will only retain a few core members, while departments such as algorithms, validation, and design have been significantly downsized. Market analysts suggest that this reflects the company’s strategic response to the dual pressures of cost and timeline associated with the production of Wi-Fi 7 technology, prompting a shift of resources towards other more critical business areas.
According to reports, many of the employees affected by the layoffs this time come from Qualcomm’s wireless R&D department in Shanghai. Following the Qualcomm layoffs in 2023, they transitioned to TP-Link, only to face another round of layoffs now. This highlights the tough situation in China’s wireless network industry under the double pressures of international sanctions and a harsh market environment.
According to public information, TP-Link will be divided into two entities starting in 2024: Pu Lian Technology Co., Ltd. in China and TP-Link Systems (Lian Zhou International) in the United States, with headquarters located in Shenzhen and Irvine, California, respectively. Leveraging its price advantage, TP-Link has maintained a leading position in the global router and switch market, previously achieving a market share of up to 45% in the wireless router segment, and even reaching 60% in the U.S. home and small office market.
Due to TP-Link’s significant influence in the US market, both the Department of Justice and the Department of Commerce have launched an investigation. They are examining whether TP-Link’s low pricing strategy amounts to unfair competition and are looking into the actual connections between TP-Link Systems and Chinese entities to assess whether this poses potential threats to national security. One key focus of the investigation is whether the brand has invaded the home market with competitive pricing, thereby risking the security of the United States’ information infrastructure.
