news


It has been a week to forget for Qualcomm

Qualcomm MWC 2018

Hurdles in China with its NXP acquisition, potentially losing ZTE as a customer and cutting almost 1500 employees; it’s not been a good week for Qualcomm.

Starting with NXP. The $44 billion acquisition has been rumbling on for months with few regulatory hurdles remaining. Then came along China. A cynical individual might assume the authorities were blocking the deal in some sort of retaliation move, but Qualcomm won’t care about that. The reason is irrelevant, the outcome is still the same.

Qualcomm might have become a bargaining chip, but it is at least trying to make the situation work. The concern here is down to competition in the semiconductor market which is becoming smaller each month. Consolidation is a key world here, though Qualcomm has been given the green light from a number of different markets, most notably Europe which is usually quite sensitive to market competition fluctuations; just look at the desire to have four operators in each nation, despite the logic of a pan-European operator model being quite blatant.

In terms of the details, the end date of the purchase agreement between Qualcomm and NXP has been extended from April 25 to July 25 2018, though if approval isn’t received by all by 11:59 p.m. New York City time on July 25, including by China, the deal will be scrapped, termination fees paid and execs will head back to the diversification drawing board. Qualcomm has received clearance from the FTC, so it seems China is the final major pot hole to negotiate.

Of course, there is the risk Qualcomm is a bargaining chip in the saga involving the US and ZTE, a tale the Chinese government will be keeping a close eye on. ZTE, which is starting to make some genuinely positive moves in Western markets, is a Qualcomm customer. Reports suggest ZTE purchases 70% of its chips from Qualcomm, meaning an export ban for all US products to the firm is not good news for Qualcomm.

The US Department of Commerce’s Bureau of Industry and Security is likely to be getting numerous phone calls and visitors this week, and we’d imagine Qualcomm’s lobbyists will be in the queue somewhere. Protectionism does not benefit anyone but the short-sighted and xenophobic, and Qualcomm is a company which has benefited from globalisation trends. Executives will not be happy with this development and the inevitable trade war to follow.

Finally, wrapping up an awful week for Qualcomm, Bloomberg is reporting the chipmaker will be laying off 1,231 employees who are based in the San Diego headquarters, while an additional 200 will find themselves frogmarched to the door in Santa Clara and San Jose. Over the last couple of months, Qualcomm has been promising investors it would reduce costs as a concession to the NXP deal, with those guarantees now coming to fruition.

Qualcomm needs to get some wind back in its sales, as there is only so long negative press and stagnant markets can continue. Over the last five days share price has declined by more than 6%, though it is down 19% since the beginning of the year. Some good news will be needed sooner rather than later.

  • 2020 Vision Executive Summit

  • LTE Advanced Pro and Gigabit LTE: The Path to 5G

  • TechXLR8

  • The BIG Communications Event

  • 5G North America

  • 5G World


Leave a comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Polls

Following comments from the European Data Protection Supervisor, do you feel the internet giants are taking advantage of the digital economy?

Loading ... Loading ...