Comms chips

Qualcomm to Remain Absolutely Fabless

SAN DIEGO -- Uplinq -- Qualcomm Inc. (Nasdaq: QCOM) is doing what it can to mitigate the supply issues that have delayed sales of devices that house its Snapdragon S4 chipset, but the slowdown may continue to affect the company through next year.

Speaking at the chipmaker's annual developer conference, CEO Paul Jacobs said the delays were due to 28-nanometer (nm) supply issues. Taiwan Semiconductor Manufacturing Company (TSMC) produces the 28nm SoC (system on a chip) components for Qualcomm and others and fell behind on production after the chip giant underestimated demand for the popular smartphone processor.

TSMC claims the company could remain behind through 2013, but Jacobs said Qualcomm is doing what it can to ensure that doesn't happen. Now it works with several suppliers and is "looking at different business relationships to ensure the supply shortage we had doesn't happen again."

But, he said, it may continue to have reverberations through the end of the year.

"Customers also recognize that the next chips we have coming at the end of the year are great chips," Jacobs said in a press conference. "There may be some impact, but it won't be significant."

The admission prompted an audience member to ask why Qualcomm doesn't just own its own fab (the semiconductor factory where chips are fabricated).

Jacobs wasn't firm in his rejection of the idea, admitting that Qualcomm has the money to do so. But, he said, right now he likes the company's current fabless model.

"We have the core competencies inside to do it, but if we can continue to leverage the horizontal model fabless, we'll continue to do so," Jacobs said. "We like that model."

"We aren’t writing big checks," Jacobs added. "But, if in the future it took that, we'd weigh those issues. It's in a little of a state of flux, since we're still managing through the shortages right now. We don’t want to say no to anything right now."

Well, there was one thing Jacobs will say no to, actually. That's the idea of Qualcomm building its own mobile device. He gave an emphatic "no" when asked if he'd follow the likes of Apple Inc. (Nasdaq: AAPL) and Microsoft Corp. (Nasdaq: MSFT) into building their own tablets.

"There's definitely a big benefit to focusing on what you're good at and finding partners that can do what they're good at," the CEO said.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

sarahthomas1011 12/5/2012 | 5:29:00 PM
re: Qualcomm to Remain Absolutely Fabless

Yeah, Qualcomm has the cash to do it, but I think investors would look poorly on it spending it that way. His "no" wasn't very convincing though!

Pete Baldwin 12/5/2012 | 5:29:00 PM
re: Qualcomm to Remain Absolutely Fabless

It's interesting how the pendulum is swinging back... a few years ago, no one questioned the fabless model, and any chip company owning its own fab was an anomaly (in CMOS, anyway).

Now, TSMC gets some hiccups, and people see Intel's continued success -- and you start hearing the question, "Why *don't* you own your own fab?"

Owning a fab is expensive work. I don't see that trend coming back any time soon... but the fact that the model is getting questioned again is interesting.

sarahthomas1011 12/5/2012 | 5:28:59 PM
re: Qualcomm to Remain Absolutely Fabless Right. And it won't do it again! He said they learned the hard way it's not their strong suite.
krishanguru143 12/5/2012 | 5:28:59 PM
re: Qualcomm to Remain Absolutely Fabless

"Well, there was one thing Jacobs will say no to, actually. That's the idea of Qualcomm building its own mobile device."


Qualcomm has made devices in the past; they sold that division to Kyocera.

krishanguru143 12/5/2012 | 5:28:58 PM
re: Qualcomm to Remain Absolutely Fabless

Actually it was a different reason.  Since Qualcomm wanted to take on the world, they couldn’t be both in the chipset business and sell phones the way Qualcomm does business.  Several of the manufacturers were complaining that Qualcomm was selling chips to themselves cheaper than they were selling them to their competitors.  This put the handset division at Qualcomm at a huge competitive advantage.  Qualcomm was also doing everything they could at the time to make sure others wouldn’t product chips and if they did, they paid a premium for the license.  This made a Qualcomm handset cheaper than the competitors and the competitors were forced to use Qualcomm chips.  If Qualcomm tried the same stunt again, their chip business would be dead as HTC, Samsung, Kyocera, etc. would all find another supplier as which there are plenty.  How many times has Qualcomm been sued over antitrust issues?  The company is rotten to the core and that is their business practice.

Qualcomm has carried the above business practices forward to everything it has touched.  Take W-CDMA, they did everything they could to kill it as they wanted EV-DO to be used.  When they saw they lost, they still did nothing for it but have their hand out for the royalties.  Then the 4G proposals were coming around.  Once again, Qualcomm was pushing its own proposal and tried to squash all other 4G proposals; like LTE.  In the end, Qualcomm still has had it hand out for the royalties.  At the end of the day, if Qualcomm faded away, it would not be missed and wouldn’t hurt future development but actually help increase it.

krishanguru143 12/5/2012 | 5:28:57 PM
re: Qualcomm to Remain Absolutely Fabless

Nope, just have despised them for how their conduct business.  From the start they have tried to be a monopoly.  You had the handset makers crying foul due to their business practices and eventually they sold the handset business.  You had Ericsson crying foul over the Base Station business later which was sold to Ericsson.  Broadcom lawsuit?  Nokia lawsuit?  The EU was even involved.  Every chance they got they tried to squash any competitor and competing technology even if it is built upon IP they own.  Even the FTC was looking into Qualcomm.


The only good thing that Qualcomm has done, invented CDMA.  That is it.  Since then, they have done more damage than good.  They remind me of a few companies out there, there is a term for them, patent trolls.

sarahthomas1011 12/5/2012 | 5:28:57 PM
re: Qualcomm to Remain Absolutely Fabless

Any chance you used to work at Qualcomm? Perhaps got laid off? :)

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