Jacobs announces abandonment of Qualcomm privatization

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According to foreign media reports, Paul Jacobs, the former CEO of chipmaker Qualcomm, said recently that he has given up his efforts to take the chip giant private and instead focus on running his own network startup Xcom Labs, which is only an eight-minute drive from Qualcomm headquarters.

Jacobs, whose father helped found Qualcomm more than 30 years ago, put himself at odds with Qualcomm last year when he proposed a private takeover of the chipmaker, but now says he will focus his energies on wireless technology startup Xcom Labs.

The decision marks a reversal for Jacobs, who had begun raising money but the two sides failed to agree last year on a valuation for Qualcomm, which is currently valued at $68 billion. If the deal goes through, it would likely be the largest tech stock acquisition ever, surpassing Dell's $67 billion purchase of EMC in 2016.

"With Qualcomm's changed position, the conditions for taking it private are no longer appropriate," Jacobs said. "However, industry dynamics have created opportunities for our new company, Xcom, to drive the development of advanced wireless technologies, and we have exciting new ideas to bring to market."

After Paul Jacobs, the former CEO of Qualcomm, stepped down last year, it was reported in April that Jacobs had been contacting multiple investors to seek financing to buy Qualcomm in order to privatize Qualcomm. The news said that Jacobs had made progress in raising enough funds to privatize Qualcomm and might acquire Qualcomm in the next few months. He reiterated this idea in an interview in November of that year.

In the middle of last year, he founded a new company called "XCOM", which will be dedicated to the development of 5G wireless technology.

The startup, called XCOM, will invest and develop technologies to solve some important 5G problems, such as reducing latency and improving reliability. Jacobs himself serves as chairman of the board and CEO of the company. Derek Aberle, the former president who left Qualcomm last year, and Matthew Grob, who served as Qualcomm's chief technology officer from 2011 to 2017, have joined the company as chief operating officer and chief technology officer, respectively.

According to Paul Jacobs, the establishment of XCOM will not affect Jacobs' plan to privatize Qualcomm.

"It's not clear how the plan to privatize Qualcomm will develop or how long it will take," Aberle said in an interview. "But it's not an either/or question. We are developing this new company, and we have high expectations and confidence in the privatization plan." He also said he would not disclose more information on raising funds to privatize Qualcomm.

Abery said XCOM plans to recruit more talent in the coming months. He said XCOM's business model will be to license 5G technology to other companies or provide software and designs for semiconductors to other companies. Because it is still in the early stages, XCOM executives have not yet determined a clear business model, he said. "There is still a lot of work to be done to prove the applicability of 5G in various IoT applications. We feel like we have some better ideas about how to do things," Abery said.

Aberle also said that if the plan to privatize Qualcomm becomes a reality, XCOM's technology will be applied to Qualcomm's chips, or the entire XCOM will be incorporated into Qualcomm.

Jacobs' father, Irwin Jacobs, is one of the co-founders of Qualcomm. Paul Jacobs served as Qualcomm's CEO from 2005 to 2014. After rival Broadcom's hostile takeover of Qualcomm failed earlier this year, Jacobs also resigned as chairman of Qualcomm's board of directors because Jacobs notified the company's board of directors that he intended to privatize Qualcomm.

*The content of the article represents the author’s personal opinion and does not represent Semiconductor Industry Observer’s agreement or support for that opinion.

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