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Qualcomm's former CEO is launching a wireless chip company

But even with the launch of XCOM, Paul Jacobs still wants to take his former company private.

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4 min read
Paul Jacobs

Paul Jacobs is starting a 5G company. 

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Former Qualcomm CEO Paul Jacobs has started a company focused on wireless technology -- but that doesn't mean he's giving up on his plans to take Qualcomm private.  

The startup, called XCOM, will work to tackle issues related to next-generation mobile communications, including 5G. Qualcomm's former president, Derek Aberle, and former chief technology officer, Matthew Grob, also have joined the new company. Aberle will serve as XCOM's operating chief, and Grob will be CTO. Jacobs will serve as CEO. 

"Our feeling is there's not enough investment happening around communications and wireless tech in the US in particular," Aberle told CNET in an interview. XCOM aims to look at issues related to 5G like reliability, latency and security, he said, as well as "ideas for how we can advance beyond those things."

Jacobs first started working at Qualcomm in 1990. He served as CEO from July 2005 to March 2014 and was on the board from June 2005 until March. During his time at Qualcomm, he helped develop some of the key wireless technologies used in mobile devices today. Qualcomm, while facing struggles with customers, is the world's biggest provider of 4G chips used in devices such as Apple's iPhone X and Samsung's Galaxy S9. 

Jacobs left his role as Qualcomm's chairman in March after Broadcom's hostile takeover attempt for the chipmaker failed. Qualcomm at the time announced that Jacobs was looking at buying out the company his father, Irwin Jacobs, co-founded. Such an offer seems to have little chance of success as Jacobs owns 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.

But Jacobs -- along with Aberle, who retired from his role as head of Qualcomm's licensing business at the end of 2017 -- has continued with efforts to raise billions of dollars for a Qualcomm acquisition. 

"In no way does this [new company] mean we're stopping," Aberle said Wednesday.  

He added that there's "good interest" in helping fund a Qualcomm buyout and that he and Jacobs have been "engaged in discussions with a number of potential funding sources." The possibility of actually launching a bid for Qualcomm depends partly on the outcome of the NXP deal, he said.

"It doesn't affect discussions on getting ready for" a possible Qualcomm buyout, Aberle said. "But in terms of what bid or offer to take in, that's an important component." He declined to give more details about possible backers or the potential offer.

Waiting on NXP

Qualcomm has been trying to buy NXP, a rival chipmaker with a big reach in automotive, since October 2016, but the $44 billion acquisition has been held up by Chinese regulators. The current belief is if the US lifts its ban on Chinese telecommunications provider ZTE, China will approve Qualcomm's NXP acquisition. 

Watch this: ZTE gets a lifeline to resurrect its business

Last month, the US Commerce Department issued a seven-year ban on US companies doing business with ZTE as punishment for doing business in Iran and North Korea. The ban has proved crippling, forcing the Chinese company to shut down major operations. But President Donald Trump has come to ZTE's rescue, and it's believed that ZTE will pay $1.7 billion in penalties to resume doing business in the US. In return, China may sign off on Qualcomm's NXP acquisition. 

RBC Capital Markets analyst Amit Daryanani noted last month that the probability for the deal to receive Chinese approval "has improved over [the] last few weeks." The deadline for the deal to be approved or called off is July 25. 

XCOM's ambitions

XCOM plans to build its staff and has made offers to a batch of potential employees, Aberle said. He didn't specify how many people XCOM plans to hire. Aberle also said Qualcomm plans to talk to potential strategic partners about its efforts.

XCOM may license some of its technology or release software and designs of its own, Aberle said. It may also partner with chip companies to integrate XCOM's technology into the partner's products. 

The aim is to have trials or demo systems running with the first year of XCOM's operations, Aberle said. 

iPhone X vs. Galaxy S9 Plus: Photos from our comparison

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The technology XCOM plans to develop will be complementary to Qualcomm's efforts, Aberle said. He added that Qualcomm could become a partner or a even a customer of XCOM, and if he and Jacobs succeed in taking Qualcomm private, XCOM could be absorbed into or acquired by Qualcomm. 

"Qualcomm is carrying the brunt of the load in terms of investment in the US," Aberle said. "It's getting harder and harder. We think we have value we can add."

CNBC earlier reported the news. 

First published June 6 at 12:38 p.m. PT.
Update at 2:32 p.m. PT: Adds details from interview with Derek Aberle. 

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