Qualcomm Has No Plans To Spin Off Chip Making Unit

The mobile System-on-Chip market is a tough industry. Compared with just half a decade ago, semiconductors inside our smartphones, tablets and Chromebooks are expected to run faster and for longer, driving a significantly higher resolution display, cope with two or three additional ways to connect with other devices, whilst remaining cool under pressure and sipping at the battery. In order to get to this point, the industry has had to continuously work, rework, refine and improve on existing products or to sometimes replace an existing line of technology with a new line. Qualcomm have been one of the more successful SoC manufacturers, having incorporated a baseband processor (or modem) into their System-on-Chips (or SoCs), which has simplified the design and manufacturing process for its customers, building devices for the world. However, Qualcomm has been through many hoops and design cycles to get to this point. Just last year we saw the business phase out its custom line of SoCs, called "Krait," in favor of the reference ARM design. We knew that this would be a temporary measure as Qualcomm's new custom core design, called Kryo, is expected to debut later in the year and has required considerable resource, research and effort from the US chipmaker for approximately twelve months offering the reference core design.

During this time, Qualcomm's competitor have not stood still. MediaTek, especially, have made great strides into the SoC market, offering a very competitive product line at tempting pricing. We've also seen other manufacturers such as RockChip branching out into the market with their chips being used inside Chromebooks, for example. We've seen Qualcomm come under Government scrutiny, especially in China, where the business has been forced to change licence terms. The mobile processor market is still growing but competition is intensifying: Qualcomm, and its competitors, have to run just to keep up.

Something not helping Qualcomm is investor pressure to spin off it chips business. Structurally, Qualcomm's chip making business exists alongside the patent-licensing business but in the words of hedge fund, Jana Partners, is "essentially worthless." Qualcomm's Executive Chairman, Paul Jacobs, said this on the matter: "We've had that discussion for a long time, many years the board has looked at it but we still think the synergies of having the businesses together outweighs the dissynergies." Clearly, Qualcomm are thinking much deeper than the cash flowing into and out of the chip manufacturing business but instead of the intangible benefits to having a chip manufacturing plant bolted onto the side of the patent licensing unit. These benefit include a cleaner design and development process, which should shorten the time it takes to get a new SoC to the market. It should also improve the security of Qualcomm's intellectual property as there should be fewer potential sources of leaks. It is also fair to point out that Qualcomm should understand these benefits better than a hedge fund.

Copyright ©2019 Android Headlines. All Rights Reserved
This post may contain affiliate links. See our privacy policy for more information.
You May Like These
More Like This:
About the Author
2015/07/b3c77426-3c33-4e58-aab1-23e9a0bfa03d.jpg

David Steele

Senior Staff Writer
I grew up with 8-bit computers and moved into PDAs in my professional life, using a number of devices from early Windows CE clamshells and later. Today, my main devices are a Nexus 5X, a Sony Xperia Z Tablet and a coffee cup.