Acquired · Qualcomm · Overview
Qualcomm
Licensing-and-royalty model in a hardware industry.
Major events · 1985–2018
- 1985Founding
Qualcomm founded in San Diego
Irwin Jacobs and co-founders leave Linkabit. Early projects include satellite communications and OmniTRACS (truck fleet tracking). CDMA research begins in parallel.
Acquired Qualcomm episode
- 1993Strategic shift
US adopts CDMA standard — Qualcomm's bet pays off
The US Telecommunications Industry Association selects CDMA as one of two competing wireless standards. Qualcomm's patents now cover mandatory infrastructure for US wireless.
Acquired Qualcomm episode
- 1999Strategic shift
CDMA adopted as basis for 3G globally (CDMA2000 + WCDMA)
The ITU selects CDMA-based standards for 3G worldwide. Even WCDMA (the GSM-family 3G path) uses Qualcomm-patented technology. Every 3G device globally owes Qualcomm a royalty.
Acquired Qualcomm episode
- 2000IPO
Qualcomm IPO — and then a 2,700% stock gain in 1999
Qualcomm actually IPO'd in 1991; it gained 2,700% in calendar 1999 — the best-performing stock in the S&P 500 that year — as investors priced in the CDMA royalty stream.
Acquired Qualcomm episode
- 2018Crisis
Broadcom hostile bid for $117B — blocked by CFIUS
Broadcom (then incorporated in Singapore) launched a hostile takeover bid. CFIUS blocked it on national security grounds: Qualcomm was deemed too strategically important for 5G to allow a foreign acquisition.
Acquired Qualcomm/Broadcom episode
Origin
CDMA (Code Division Multiple Access) was a superior wireless standard to the GSM the rest of the industry had adopted. Qualcomm bet the company on CDMA being adopted, and then structured its business so that every CDMA device in the world owed Qualcomm a royalty regardless of who made the chips.
Irwin Jacobs and six co-founders left Linkabit to found Qualcomm in 1985. The company's early projects included satellite tracking and a trucking logistics product (OmniTRACS). The strategic turning point was CDMA: Qualcomm invented and patented the CDMA standard for wireless communications. When the US wireless industry selected CDMA as an alternative to GSM in the 1990s, and when CDMA became the basis for 3G globally, Qualcomm's IP portfolio became mandatory. Every carrier and device manufacturer that shipped a 3G device owed Qualcomm a royalty on the price of the device — not the chip, the device. The business model decoupled Qualcomm's revenue from chip manufacturing competition.
Key facts
Semiconductor revenue (QCT, FY2023)
~$30B
Licensing division (QTL) operating margin
~70%+
Broadcom hostile bid for Qualcomm (2018)
$117B
Episodes · 2 covering this company