Qualcomm adjusts structure and creates new subsidiary to protect technology patents

Beijing time, June 29, according to foreign media reports, mobile phone chip supplier Qualcomm announced on Thursday that it will adjust its internal structure and establish a new subsidiary to protect its technology licensing business. The newly established subsidiary will be mainly responsible for the development of open source wireless technology.
A large part of Qualcomm's revenue comes from selling patent licenses to other companies such as mobile phone manufacturers that use its technology patents. Regardless of whether those mobile phone manufacturers use Qualcomm's chips, as long as they use Qualcomm's technology patents, they must purchase patent licenses.
Currently, the wireless technology industry is full of lawsuits related to technology patents.
Under the new corporate structure, Qualcomm will operate as a parent company, which will include a technology licensing department and various functional departments, and own most of Qualcomm's patents. The newly established Qualcomm Technologies (QTI) will include the company's previous R&D business and wireless chip business.
Qualcomm said that the company needs to make adjustments to its internal structure to protect its patent licensing business because the newly established subsidiary intends to increase cooperation with open source software. Open source projects usually involve sharing technology with the development community.
Although Qualcomm's parent company will retain most of the patents, Qualcomm Technologies will own some patents developed specifically for open source software contributions.
Bernstein analyst Stacy Rasgon said the move would not upset shareholders because it would not affect Qualcomm's financials. He saw it as a forward-looking move by Qualcomm to protect its patent business, which has higher margins than its chip business.
"If they think their patents could get out as part of an open source project, they're clearly right to do so," Rasgon said. Qualcomm said
that under the new corporate structure, Qualcomm Technologies subsidiaries would not have the right to license patents held by the parent company.
Qualcomm said the restructuring was not intended to split off its chip or licensing businesses, nor was it a response to third-party actions. Qualcomm
said the restructuring would be completed during the first quarter of fiscal 2013 and would not change the way the company reports financial statements.

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