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Once Again, Qualcomm Says No to Splitting Itself

It's the third time the company has considered a split.

Asa Mathat

Despite shareholder pressure, Qualcomm says it won’t split apart its chipmaking and licensing businesses.

“The strategic benefits and synergies of our model are not replicable through alternative structures,” CEO Steve Mollenkopf said in a statement. “We therefore believe the current structure is the best way to execute on our strategy to build on our position in the ecosystem and deliver enhanced performance and returns. Looking ahead, we have a focused plan in place that we believe will drive growth and we are off to a good start implementing that plan.”

The company was being pushed to consider such a move amid weakness in both businesses, but the board concluded such a move wouldn’t help matters. It’s at least the third time the board has weighed a split.

While Wall Street types tend to like such moves, Qualcomm gets a lot of benefits by keeping the two businesses combined, including shared research and development costs. It’s not clear how splitting would help the company in the areas where it is struggling — namely, pressure from competitors on the chip side and a tough China market on licensing.

That’s not to say the company doesn’t need some shaking up. Its once-dominant position powering the latest LTE smartphones fell dramatically in 2015 as Apple grew its market share at the high end of the market and Samsung opted to go with a homegrown chip rather than use Qualcomm’s Snapdragon 810. Sources say Samsung will use the new Snapdragon 820 for at least some versions of next year’s flagship model — a decision helped by the fact that Qualcomm is manufacturing the chip in Samsung’s own factories.

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