Qualcomm wants to move out of your pocket into your car, house and wearable

The world's biggest maker of mobile chips that power smartphones sees lots of room to grow next year. But a glitch in China may hold it back.

Ben Fox Rubin
Ben Fox Rubin Former senior reporter
Ben Fox Rubin was a senior reporter for CNET News in Manhattan, reporting on Amazon, e-commerce and mobile payments. He previously worked as a reporter for The Wall Street Journal and got his start at newspapers in New York, Connecticut and Massachusetts.
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Mobile-chip maker Qualcomm needs to broaden its offerings as sales of smartphones -- and thus the chips that power them -- slow. Pictured here: CEO Steve Mollenkopf. CNET

NEW YORK -- Qualcomm, the world's biggest maker of chips for mobile devices, wants to stretch out beyond your pocket and work its way into your car, your home, the wearable gadgets you're expected to don in coming years and even into your city.

"The car today is really an amazing platform [in which] to put smartphone technology," Steve Mollenkopf, Qualcomm's CEO, told analysts at a company investor-relations meeting here Wednesday.

Qualcomm is working on technology to make cars "see" and let them "talk" to each other. It's also driving the development of the Internet of Things, the concept of connecting all kinds of objects -- from lights to clothing to thermostats to stoves -- to the Internet. The company is also expanding into more tablet computers.

Qualcomm's strategy stems from a need to find new ways to worm its way into your life as the growth in smartphone sales slows. Company executives said they continue to expect plenty of gains in Qualcomm's main smartphone business, particularly in mid- and lower-tier devices in emerging markets. But they also see cars, homes and cities as big opportunities. These new businesses have already generated more than $1 billion in revenue for Qualcomm in the latest fiscal year, out of the company's $26.5 billion in revenue overall.

Qualcomm's push beyond chips mirrors efforts by two of its chief rivals: Intel this year began selling wearable devices, while Nvidia now sells its own tablets and its own handheld gaming system.

Moving into these new markets should help Qualcomm grow as more objects connect over the Internet, said Mike Walkley, an analyst for Canaccord Genuity. The strategy is a logical next step because smartphones will likely become a hub for those objects.

Qualcomm also revealed plans to sell its chips for data centers. That move would place Qualcomm in new competition with rival Intel, now the dominant maker of chips for servers. That market is expected to reach $20 billion in worldwide sales by 2020.

"It will take us a while to build this business, but we think it's an interesting opportunity," Mollenkopf said.

Qualcomm's effort to move into servers could be seen as a way to fight back against Intel, which has been spending heavily -- though gaining little traction so far -- to grow its mobile-chip business.

"We take all competition seriously," an Intel spokesman said Wednesday about Qualcomm's server push. "We also feel very good about our current products, our product pipeline and our ability to continue innovating and giving customers what they need. We welcome the competition."

Wednesday's event was clouded by Qualcomm's problems in China, where the company faces a government investigation into whether it violated anti-monopoly laws. Qualcomm executives repeatedly referenced China but provided few new details about the probe or when it may end.