Paul Jacobs, former Qualcomm CEO and chairman, seems to have abandoned his dream of buying the chip company, and will now concentrate on his new start-up, XCOM.
Last June, Jacobs left Qualcomm’s board at a time when the company was the subject of an acquisition bid by Broadcom (subsequently blocked by the US government) and was itself trying to acquire NXP (which also fell through). He was trying to line up investors to finance his own buyout of Qualcomm, taking his family firm (co-founded by his father Irwin Jacobs) private. This could have boosted its immunity to hostile takeover, and potentially sparked a full-scale reform of its business model amid multiple lawsuits (including that from Apple) and antitrust probes.
However, the end of the Broadcom deal, the cost involved, and the likely investor nerves caused by the escalating Apple feud, all made the quest unrealistic, and Jacobs’ proposal was dismissed by Qualcomm’s board.
Now, he says he will not revisit the scheme, and will focus his energies on the start-up he founded at the same time as quitting Qualcomm.
“As Qualcomm’s position changed, the conditions weren’t right to take it private,” Jacobs told the Wall Street Journal. “However, industry dynamics have created an opportunity for our new company XCOM to drive the development of advanced wireless technologies, and we have exciting new ideas to bring to market.”
XCOM was co-founded with two other former senior Qualcomm executives, Derek Aberle – the firm’s president until the end of 2017, and Matt Grob, the EVP of technology who left in May 2018. It recently acquired M87, another networking start-up led by former T-Mobile executive Cole Brodman, and focused on device-to-device mesh network technology.
Details of its plans are still sparse, though Jacobs describes its mission as giving “everyone’s phones the ability to route traffic like a cell tower”. In an interview with the San Diego Union Tribune when the company was founded, the three founding executives said they would target 5G and IoT applications, and they particularly highlighted solutions which enable large amounts of compute processing power to be supported at device level, to reduce the volumes of data which need to be sent to the cloud (or even the edge cloud) to be processed.
This has been a significant theme at Qualcomm in recent years. Clearly, it is in the interest of a device chipmaker to increase the capabilities of those devices, to boost their value, rather than allow them to become dumb objects hanging off a smart cloud.
Qualcomm’s high end processor/modem combinations have helped the smartphone turn into a full computer, and the Internet of Things, especially applications which require low latency or high security, improves the argument for placing strong resources in the hands of the user. Qualcomm has demonstrated machine learning, machine vision and other AI-related processes that previously required server power, on its Snapdragon chips. So XCOM may well be thinking along similar lines.