Making things isn’t the only way to make money.
Qualcomm makes the bulk of its profit from licensing its patents to businesses, not from producing wireless communications products. The bulk of its revenue comes from chipmaking. This company is a leader in telecommunications equipment, as well as being a multinational semiconductor company.
With two hundred and twenty-four locations across the globe and more than twenty-two billion dollars in revenue, the company employs thirty-five thousand people all over the world.
Qualcomm runs a number of wholly-owned subsidiaries. These include:
- Qualcomm Technologies Inc., which runs almost all of Qualcomm’s research and development activities.
- Qualcomm CDMA Technologies, which sells the company’s products and services, including its highly profitable chipsets.
- Qualcomm Technology Licensing, which takes care of patent licensing for the company.
The company went into business in 1985, founded by seven former employees of the company Linkabit. The company was spearheaded by Dr. Irwin Jacobs.
The name Qualcomm is an amalgamation of the words quality and communications. The original projects of the company surrounded contract research and development for defense and government projects.
Merger and Growth
Three years after its founding, Qualcomm merged with Omninet and began producing satellite communication systems. The company experienced massive growth during this time, going from eight employees to more than six hundred. By the end of the 1980s, the company had annual revenues of more than thirty-two million dollars.
The company operated at a loss throughout the nineties, but this was by choice as the company poured its money into research and development following its IPO in 1990. By the end of the decade, Qualcomm had laid off seven hundred cell phone manufacturing employees, spinning that service out to a different company and restructuring to put the emphasis on its lucrative patent business.
Dominant Market Showdown
Qualcomm got itself into some serious trouble along the way. The European Commission found Qualcomm guilty of abusing its dominant position in the market in 2018. The company was fined nine hundred and ninety-seven million euros following this finding. Just a few months later, the company removed its CEO Paul Jacobs and replaced him with Steven Mollenkopf.
Mollenkopf’s vision is to expand the company’s consumer presence, moving into wearable devices, wireless car technology, and pushing into new consumer markets.
Intellectual Property Manager
Qualcomm is in the business of intellectual property. Protecting its intellectual property has long been a hallmark of Qualcomm’s business. It’s necessary in order for the company to continue to make profits, as otherwise, just anyone could use its work.
In 2018, Qualcomm filed suit against Intel in the United States for copyright infringement. It settled with Intel in exchange for production of technical materials. Similarly, Qualcomm also sued Apple. Apple had used Qualcomm’s technology without appropriately reimbursing it for the patents. A United States court ruled on the matter in 2019 and found that Apple had to pay thirty-one million dollars to Qualcomm, one dollar and forty-one cents per iPhone that was sold without the rights to the patent.
Qualcomm largely markets its intellectual property through direct business to business methods. Though it does a great deal of direct marketing, the company has also worked hard to put its products at the top of the marketplace through extensive and expensive R&D. It’s a major boost for business when people come to you because your products are just that good. Qualcomm has made its business the business of being better.