Balancing act: Chip giant Qualcomm caught between Washington and Beijing
Qualcomm, which owns more 5G patents than any other company in the world, is a key supplier to the US government as well as to China’s vast telecommunications industry
Chip maker Qualcomm, blocked this week from a takeover bid amid national security fears, was already walking a Pacific tightrope: it has government and defence contracts in the United States, but two-thirds of its revenue come from China.
US President Donald Trump on Monday halted microchip maker Broadcom’s US$117 billion takeover of Qualcomm over concerns it would give China the upper hand in the next generation of mobile communications, forcing the Singapore-based firm to drop its bid.
The move illustrated the awkward position of Qualcomm, which is based in San Diego, California.
In the US, it has government and defence contracts and is seen as a “trusted” supplier.
In China, it has its most lucrative market, thanks to patent licensing fees it receives there from smartphone suppliers, including Apple, Samsung Electronics and Xiaomi.
On top of that, China, the US and Europe are racing to develop the next generation of mobile network technology, called 5G, for smartphones and other internet-connected devices. Whoever controls the technology will gain a potential strategic advantage, and the US government does not want to have to rely on Chinese-made equipment.