In order to protect its patent licenses from further
infringement as well as to boost its open source platform for chip
), which primarily develops chips for CDMA-based smartphones, plans
to create a separate operational unit called the Qualcomm
The new business division, which will come into force from the
first quarter of 2013, will consist of the research-and-development
unit and the Qualcomm CDMA Technologies (QCT) segment, which
comprised of the semiconductor business. The holding company will
continue to manage the Qualcomm Technology Licensing (QTL) business
segment and will also look after the corporate affairs of the
company. Moreover, it will also retain most of its patent licensing
portfolio while parting with a handful of patent portfolios to
Qualcomm Technologies Inc. to share it with the third party (open
source community) for creating an open source platform, thereby
enhancing its future chip design.
Most technology companies remain exposed to the threat of
intellectual property infringement and Qualcomm is no different.
Earlier, the company faced many legal battles, which resulted in
heavy litigation expenses. In, 2009, Qualcomm lost a long pending
) for violating its patent that resulted in an $891 million bailout
for the company.
So to avoid such legal issues, Qualcomm decided to start a
separate business unit primarily dealing with technology licenses
as well as giving the opportunity to Qualcomm Technologies Inc.
division to work closely with the Android application
developer, in order to create advanced processors for future.
Qualcomm is already providing necessary tools and technical
support to Android application developer to closely integrate the
programs they develop into the Snapdragon S4 8960 processor. So
segregation of its QTL segment will help the company to avoid any
legal issues with the open source developer. Moreover, the
authority to grant license will lie solely with the parent company,
hence providing full security to its patent licenses.
Currently, Qualcomm has a Zacks #3 Rank, implying a short-term
Hold rating on the stock.
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