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6 Things You Didn't Know About Qualcomm Inc.

By Leo Sun – Jul 5, 2017 at 2:17PM

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These six lesser-known facts about Qualcomm reveal brain drain issues and its desire to diversify away from smartphones.

Qualcomm (QCOM 0.14%), the biggest mobile chipmaker in the world, is generally known for its Snapdragon mobile chipsets and its vast portfolio of wireless patents. The former generates most of its revenue, and the latter generates most of its profits.

Both businesses have been hurting lately. The chipmaking business is ceding market share to cheaper rivals like MediaTek and first-party chips from OEMs, and the licensing business is being pummeled by various probes and lawsuits.

I've discussed many of those problems in previous articles, so today I'll focus on six lesser-known facts about Qualcomm which might change your view of the chipmaking giant.

A cutaway of a smartphone revealing a Snapdragon chipset inside.

Source: Qualcomm.

1. Truckers refer to "Qualcomm" as a device

Qualcomm was founded in 1985, and one of its first products was the OmniTRACS satellite location and messaging service for long-haul trucking companies. As a result, truckers refer to the branded in-vehicle device -- which tracks their locations and delivers messages between themselves, other truckers, and control centers -- as a "Qualcomm". 

Qualcomm eventually sold the OmniTRACS business to Vista Equity Partners for about $800 million in 2013. However, the devices retained their branding, and truckers still refer to the devices as "Qualcomms" today.

2. Its executives and engineers are pulled toward GoPro

Several Qualcomm executives and engineers left the chipmaker to join GoPro (GPRO 2.44%), the once-hot action camera maker which is now struggling to grow.

Jack Lazar, a former senior VP at Qualcomm, served as GoPro's CFO from 2014 to 2016. His successor, Brian McGee, was previously the VP of business operations at Qualcomm Atheros. On the engineering side, senior Qualcomm engineers Stepan Moskovchenko and Anuradha Jagannath both took senior engineering positions at GoPro.

A Hero 5 Black camera with accessories.

Source: GoPro.

3. It might pull GoPro away from Ambarella

These close connections between Qualcomm and GoPro might be related to the persistent rumors that GoPro could start using Qualcomm's Snapdragon SoCs in its action cameras. That could deal a tough blow to Ambarella, which currently provides the image processing SoCs for GoPro cameras.

But for Qualcomm, that move would complement its gradual expansion away from smartphones toward adjacent markets like wearables, drones, connected cameras, and other Internet of Things (IoT) gadgets.

4. It lost several key executives to Intel

Intel (INTC 1.81%) struggled to catch up to Qualcomm in the mobile market for years before finally quitting the smartphone processor market last year. But before doing so, it poached some high-profile executives from Qualcomm.

In 2014, Intel hired Qualcomm senior executive Amir Faintuch to guide its mobile and IoT businesses. The following year, it paid over $25 million to hire Qualcomm's former co-president, Venkata "Murthy" Renduchintala, to lead its IoT and Systems Architecture group. That was an unusual hire, since Intel rarely hired outsiders into its upper echelons.

5. It called a truce with Intel in one key market

Qualcomm and Intel remain fierce rivals, but they called a truce last February in one key market -- IoT communications protocols. In the past, Qualcomm led a consortium of companies called the AllSeen Alliance, which promoted the use of the open-source AllJoyn framework for IoT communications. Meanwhile, Intel led another consortium called the Open Interconnect Consortium, which used the rival IoTivity framework.

A graphical depiction of the Internet of Things.

Source: Getty.

Qualcomm and Intel wanted to draw ecosystem boundaries across the growing IoT market, but the two protocols confused vendors across an already fragmented market. That's why Qualcomm, Intel, and several other tech giants finally agreed to cooperate to build a single IoT standard under a new consortium called the Open Connectivity Foundation.

6. Qualcomm powers over 80% of Android Wear devices

Qualcomm claims that its Snapdragon chips already power over 80% of all Android Wear devices worldwide. Its newer Snapdragon Wear chips are also optimized for lower-powered fitness trackers, smart headsets, and children's smartwatches.

Qualcomm's early dominance of this market could hurt Intel, which has been expanding its IoT business into the same wearable markets. It could also help Qualcomm further diversify away from its core mobile business.

The key takeaways

Qualcomm's near-term future depends heavily on its ability to counter the lawsuits and probes, to fend off rival chipmakers, and to close its planned acquisition of NXP Semiconductors to become the biggest automotive chipmaker in the world. If it can't accomplish those three things, the company could be in serious trouble.

However, these lesser-known facts reveal that the chipmaker also has a brain drain problem, and that its long-term future depends on its ability to diversify away from smartphones and into adjacent IoT-related markets. Those moves could help Qualcomm evolve into a much more diversified chipmaker over the next few years.

Leo Sun owns shares of Qualcomm. The Motley Fool owns shares of and recommends AMBA, GoPro, and Qualcomm. The Motley Fool has the following options: short January 2019 $12 calls on GoPro and long January 2019 $12 puts on GoPro. The Motley Fool recommends Intel and NXP Semiconductors. The Motley Fool has a disclosure policy.

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