About Qualcomm Incorporated

Cell phone makers, wireless carriers, and governments worldwide call on QUALCOMM to engineer a quality conversation. The company pioneered the commercialization of the code-division multiple access (CDMA) technology used in digital wireless communications equipment and satellite ground stations mainly in North America. It generates most of its sales through the development and marketing of semiconductor chips such as its Snapdragon line and system software based on CDMA and other technologies. Its biggest customers are suppliers to mobile phone makers Samsung and Apple. The company also licenses technology rights from its large intellectual property portfolio. QUALCOMM has offered $47 billion to buy NXP Semiconductors.

Operations

While CDMA is QUALCOMM's flagship technology, it has makes products based on Orthogonal Frequency Division Multiple Access (OFDMA), which allows multiple access on the same channel, and Wideband Code Division Multiple Access (WCDMA), designed to ease the transmission of multimedia content.

QUALCOMM CDMA Technologies (QCT) is the company's biggest business, generating 75% of revenue. Its QUALCOMM Technology Licensing (QTL) unit brings in the rest.

The company outsources manufacturing to contractors.

Geographic Reach

QUALCOMM dials in 65% of its revenue from customers based in China (including Hong Kong), while customers based in South Korea supply about 15% of revenue.

Sales and Marketing

A good portion of QUALCOMM's products have gone into phones made by Apple Inc. (and its supplier Hon Hai Precision) and Samsung Electronics making them the company's biggest customers. Other significant customers are GuangDong OPPO Mobile Telecommunications Corp. Ltd. and Vivo Communication Technology Co.

Financial Performance

QUALCOMM's financials have stumbled since their peak in 2014 when the company earned nearly $8 billion on about $25 billion in sales. In 2017 (ended September), revenue hit about $22 billion, down 1% from 2016, and profit plummeted 57% to $2.5 billion in 2017 from 2016.

Revenue for the QCT segment rose in 2017 from 2016 from sales of Mobile Station Modem chips and RF, power management, and wireless connectivity circuits. Sales to Apple declined in 2017 as the iPhone maker shifted some of its chip business to Intel. A dispute with Apple and another licensee of QUALCOMM technology reduced revenue from the QTL segment in 2017.

Fines QUALCOMM paid to regulators in South Korea and Taiwan for violating trade rules helped more than halve the company's net income to $2.5 million in 2017 from about $5.7 in 2016.

Cash provided by operations fell to $4.7 billion in 2017 from $7.4 billion in 2016 because of cash used to settle fines levied by regulators in South Korea and Taiwan, as well as changes in working capital related to an increase in accounts receivable and inventories.

Strategy

It seems QUALCOMM spent more time in the courtroom and boardroom in 2017 than in the lab and factory. The company's proposed acquisition of NXP has dragged on more than a year, slowed by regulatory review and tepid response from NXP shareholders. While that deal has simmered, QUALCOMM was the target of a takeover bid by rival Broadcom. QUALCOMM turned the $103 billion offer down flat. But instead of going away, Broadcom put up a board of directors slate that shareholders are to vote on at QUALCOMM's annual meeting in March 2018.

That's the boardroom. In the courtroom, QUALCOMM and Apple have traded suits and countersuits over licensing deals. Apple shifted some of the business for communications chips in its iPhones to Intel and a dispute arose over who owns what inside the phone. Those arguments look to continue indefinitely.

Those activities somewhat obscure what could be a lucrative future for QUALCOMM with the advent of 5G wireless networks. The company has worked to develop 5G technology for about a decade and the toil is nearing payoff. The next generation of wireless networking has promise of providing faster communication with less latency, unleashing a host of new and powerful applications. On the list is car-to-car communication involved in self-driving cars. NXP and its strong automotive business is a key building block for QUALCOMM in that area.

The first 5G networks could launch in 2018 with more rolling out over the next several years. If it plays out like previous wireless generations, it means big business for QUALCOMM.

Mergers and Acquisitions

QUALCOMM moved to buy NXP Semiconductors with a $47 billion offer in October 2016. NXP accepted the offer, but the deal has taken time to wend its way through regulatory bodies around the world that must confer their approval. QUALCOMM is interested in NXP's line of chips for automotive, internet of things, and networking and security. The deal continued a wave of consolidation that's intended, overall, to create what companies hope are bulwarks against increasing competition and decreasing price points.

QUALCOMM and TDK formed a joint venture in 2017 to provide chips for mobile devices and internet of things applications. The entity, called RF360 Holdings, combines QUALCOMM's chip expertise with that of TDK in filters. Application areas are mobile devices, automotive, and drones. The ownership of the joint venture is split 51% by QUALCOMM and 49% by TDK.

In August 2015, QUALCOMM completed the acquisition of CSR, a UK-based maker of multifunction computer chips, for about $2.5 billion. CSR makes semiconductors for the auto, consumer, voice, and music market segments. The acquisition provides QUALCOMM with CSR's products, channels, and customers in burgeoning markets of the internet of things (the idea that billions of devices can be connected to the internet) and automotive infotainment.

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Qualcomm Incorporated

5775 Morehouse Dr
San Diego, CA 92121-1714
Phone: 1 (858) 587-1121
Fax: 1 (858) 458-9096

Stats

  • Employer Type: Public
  • Stock Symbol: QCOM
  • Stock Exchange: NASDAQ
  • CEO and Director: Steven M. Mollenkopf
  • Executive Chairman: Paul E. Jacobs
  • CEO and Director: Steven M. Mollenkopf
  • 2017 Employees: 33,800

Major Office Locations

  • San Diego, CA

Other Locations

  • Tempe, AZ
  • Carlsbad, CA
  • San Jose, CA
  • Santa Clara, CA
  • Boulder, CO
  • Orlando, FL
  • Cumming, GA
  • Andover, MA
  • Boxborough, MA
  • Concord, MA
  • Rochester Hills, MI
  • Cary, NC
  • Clemmons, NC
  • Raleigh, NC
  • Bridgewater, NJ
  • Las Vegas, NV
  • Austin, TX
  • Oakville, Canada
  • Cambridge, England
  • Hyderabad, India
  • New Delhi, India
  • Ciudad De Mexico, Mexico
  • Taguig, Philippines
  • Taipei City, Taiwan
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