Qualcomm looks beyond mobile phones, chips into other markets

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Long associated with the smartphone chip market, Qualcomm Inc. (NASDAQ:QCOM) has been aiming to diversity its business into other areas for a few years now . Its recent purchase of UK-based Alphawave for about $2.4 billion is a step in that direction, which will help give some traction to Qualcomm’s expansion into the data center market. Alphawave’s connectivity products enable data transfer with lower power consumption.

According to Cristiano Amon, Qualcomm’s Chief Executive Officer, in prepared remarks, “Qualcomm’s advanced custom processors are a natural fit for data center workloads. The combined teams share the goal of building advanced technology solutions and enabling next-level connected computing performance across a wide array of high growth areas, including data center infrastructure.”

Founded in 1985 by Irwin Jacobs and six of his colleagues, in San Diego, the company had its public stock market debut in 1991 at a split-adjusted price of $0.50 a share. On June16, the stock, which is on the S&P 500 index and the NASDAQ 100 index, closed at about $156.

The company’s principal business is the sale of its integrated circuit products and the licensing of its network technology-related intellectual property. In a nutshell, Qualcomm, whose name is short for ‘Quality Communications,’ explains, “The foundational technologies we invent help power modern digital experiences.” This includes its CDMA technology and OFDMA technology.

One impetus for Qualcomm’s move to seek out new markets is that Apple, which uses Qualcomm’s modem chips in its IPhones, has been going in for vertical integration with the development of its own modem chips. This move by Apple, with the company’s contract with the IPhone maker slated to expire in 2027, could impact 10% of Qualcomm’s total revenue. In addition to the data center market, Qualcomm has a presence in the automotive sector, extended reality market, edge AI, and the Internet of Things niche.

At a Bernstein investor event in May, CEO Amon noted, “If you look at the position that we're building for AI at the edge, if you look at all of those exciting markets, this is a company that has, in each and every market we chose to enter, in spite of all this skepticism, we actually build a leading platform. We didn't show up with a commodity solution. We built a leading platform and the company's proven that we can learn new tricks and execute in new areas. So I think that's the opportunity for Qualcomm. I think investors need to get probably past, and maybe that day will come when Apple is zero, and I'm going to be a more diversified company.”

So what lies ahead for Qualcomm as it seeks out greener pastures?