Qualcomm QCOM , a decades-old player in the competitive chip and 5G wireless space, appears to be at a turning point. As the company’s core business slows, it’s worth taking a closer look — not just at Qualcomm but at the chipset and semiconductor space as a whole.
Let’s pull the camera back. Qualcomm spent the early part of this decade distracted by market challenges and lawsuits (including by the U.S. government and Apple). As that chapter drew to a close, the company caught its next growth wave — the acceleration of 5G technologies. Today, as the company emerges from the era of pandemic-triggered supply chain slowdowns, Qualcomm is confronting new obstacles.
To be sure, the company remains a market leader. It clearly has longevity. And I have grown to admire it over the years. The company has always been a scrappy fighter, even after it gained power and influence. But its leadership doesn’t always make the right decisions, and sometimes their problems are self-created.
In recent years there have been signs of change on their home turf, with the company taking the hit for being a leader. For example, Qualcomm technology powers many smartphones and tablets, wireless devices and networks, and more — provided by many different companies. And in recent years, it’s been expanding into related sectors like automotive (self-driving vehicles), private wireless, health tech and so much more.
However, despite the fact that Qualcomm was firing on all cylinders just a few years ago, its strong presence in the chip and 5G wireless seems to be slipping.
The potential reasons are many. There was the global chip shortage. And there was Qualcomm’s loss of key clients (including Apple, which famously opted to develop its own chips), and more.
During presentations, executives from every company tend (not surprisingly) to focus on the growth side of their story. I believe that’s what Qualcomm is doing today. But while I agree these new sectors will be important for the company going forward, today is a different story.
Today, these new sectors are still small, emerging slices of the Qualcomm pie. In fact, I believe that if the chipset and semiconductor business were today as strong as it once was, these new segments would be afterthoughts in a growth presentation. Something to generate excitement about a somewhat distant future.
Instead, these forward-looking sectors seem to be center stage, while companies like Qualcomm (and others) still struggle with existing problems in their core sectors. Part of the solution will depend on how quickly the chipset business can be revived — or, I suppose, how quickly these companies can ignite their new segments. Other companies in the mix include Intel, AMD AMD , Nvidia NVDA , Micron Technology MU , Broadcom AVGO and more.
Meanwhile, the writing seems to be on the wall as the chipset and semiconductor space confronts major change and forces companies to visualize where the opportunities will be.
Like I said up front, Qualcomm is a fighter. They should be able to stick around as a leader in this changing space. But they have to make the right next steps to maintain leadership.
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