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Qualcomm ex-CEO Paul Jacobs reportedly gets serious about takeover

The former executive, whose father co-founded the chipmaker, reportedly is talking to strategic investors to take Qualcomm private in the next two months.

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Paul Jacobs, Qualcomm's former chairman and CEO, wants to take the company private. 

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An effort by Qualcomm's former CEO to take the company private may actually have a chance. 

Paul Jacobs left his role as the company's chairman last month after Broadcom's hostile takeover attempt failed. Qualcomm announced that Jacobs was looking at buying out the company his father, Irwin Jacobs, co-founded. At the time, such an offer seemed to have little chance of success as Jacobs owned less than 1 percent of the company, which is valued at about $90 billion. Launching an offer for Qualcomm would require backers with deep pockets.

Now CNBC reports that Jacobs has been talking to sovereign wealth funds and strategic investors, including partner Arm, to help take Qualcomm private in the next two months. Jacobs then would run the company, the publication said. 

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But Arm, in a statement to CNET on Friday, refuted the report.

"There have been no discussions between Arm and Paul Jacobs on any potential acquisition of Qualcomm," Arm said. 

Going private could give Qualcomm some advantages. The San Diego-based company is the world's largest maker of chips and processors for phones, but it's been going through some turmoil over the past few months. Not having to answer to public shareholders could give Qualcomm time to sort out its legal problems and focus on the next generations of mobile technology. 

Qualcomm and a representative for Jacobs declined to comment. 

Qualcomm shares climbed 3.1 percent to $56.92 in after-hours trading Thursday. 

Rival Broadcom, the Singapore-based maker of chips for everything from cable modems to set-top boxes to digital video recorders, announced an unsolicited bid of $130 billion for Qualcomm in November, but Qualcomm didn't believe the deal price was high enough. The bid fell apart in March after President Donald Trump signed an executive order blocking the merger because of worries about foreign control of an important US tech company. Broadcom subsequently dropped its acquisition offer.

At the same time, Qualcomm has been facing legal battles around the world over its licensing practices. Apple, one of its biggest customers, has accused Qualcomm of offering unfair licensing terms for its technology. Qualcomm responded by suing Apple for patent infringement and seeking a ban on iPhone sales. Qualcomm maintains that no modern handset, including the iPhone, would've been possible without its cellular technologies.

Jacobs first started working at Qualcomm in 1990. He served as CEO from July 2005 to March 2014 and had been on the board since June 2005. Jacobs' most recent roles at Qualcomm were board chairman, which he held from March 2009 until March 2018, and executive chairman, which he held from March 2014 to March 2018. Qualcomm replaced Jacobs with independent director Jeffrey Henderson as chairman of the board, and it eliminated the role of executive chairman in response to the Broadcom takeover struggle. But an investment by Arm could have been tricky. 

Jacobs hopes to have fewer than 10 owners involved with Qualcomm, CNBC said. And the company's control would remain in the US, helping alleviate national security concerns like those that tanked the Broadcom deal. Still, Jacobs has been working with the Committee on Foreign Investment in the United States, a government panel that reviews mergers. The group was concerned about Broadcom's offer for Qualcomm in part because of Qualcomm's huge investment in upcoming 5G and future wireless technology. 

But an investment by Arm could have been tricky. Arm designs the architecture that's the basis of most mobile chips, including those from Qualcomm, Apple and Samsung. Qualcomm is one of its most important customers and one of the main chipmakers licensing the latest and greatest processor technology. If Arm is seen as favoring one customer enough to invest in the company, it could jeopardize its relationship with others. 

Softbank, the Japanese telecommunications giant, bought Arm in 2016. Softbank last year also launched a new investment fund with nearly $100 billion from partners like Qualcomm, Apple and a Saudi Arabian sovereign wealth fund.

First published April 11 at 4:36 p.m. PT.
Update at 9 a.m. PT on April 12: Adds Qualcomm declining to comment. 
Update at 1:50 p.m. PT on April 12: Adds Arm comment refuting the report. 

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