The Qualcomm Story

When considering major technology companies from an intellectual property perspective, one would expect them to follow a model similar to Intel or Apple, one in which a company develops intellectual property (namely patentable inventions) for use in their products only, however, there is one influential industrial player which follows the exact opposite of this methodology. Formed on the 1st of July, 1985, by seven former Linkabit employees, Qualcomm started as a contract research and development center largely for government and defense projects. After a successful merger with Omninet (a software developer) and considerable funding and expansion, Qualcomm started to supply the electronics consumer market (especially in the design of microprocessor for mobile phones).

Fig. 1: Illustration of Qualcomm’s strategy

Unlike other giants of the industry, Qualcomm exclusively dealt with patents (in most cases), licensing their microprocessor designs to firms such as Samsung, Nokia and Apple. Despite initial concerns related to the sustainability of such a business model by industry experts, Qualcomm has steadily grown strong with consistently growing profits. A huge fraction of Qualcomm’s expenses is due to research and development (R&D) which produced patentable inventions which provides revenue which is reinvested into R&D (Fig. 1).

Fig. 2: Apple (a former prime customer of Qualcomm) has raised several concerns regarding Qualcomm’s pseudo-monopoly status in patents associated with microprocessors and similar inventions

Although Qualcomm is considered a pioneer in the field of microprocessor and microcontroller development, they’ve often been accused of maintaining a monopoly status via unfair means and abusing the patent system (not to mention, allegedly being a sophisticated patent troll), notably by their former customer Apple in 2018. Apple maintained their stance that Qualcomm has abused existing federal laws and their vast portfolio of patents by exercising their resources to eliminate competition (Fig. 2). They have also been investigated by the FTC (Federal Trade Commission) for alleged violations of antitrust laws.

Either way, despite all the criticism raised against this company, it cannot be disputed that Qualcomm is a pioneer in the field of microprocessors and have provided huge discoveries for the industry.