tv Leaders with Lacqua Bloomberg September 26, 2018 9:30pm-10:00pm EDT
150 dollars off and free shipping too. sale prices are available right now. go to buyleesa.com today. you need ♪ products touch's the lives of billions around the world, chips and smartphones, cars, and at the forefront of five g networks. ask an everyday person what qualcomm, and you will likely get a blank look. qualcomm has been in business headlines constantly over the last couple of years because of a bitter dispute with apple. the white house killed the hostile takeover by broadcom, which would have been the largest takeover in history. china killed qualcomm's takeover
of nxp, setting up new challenges or perhaps new opportunities for qualcomm leadership. 1.0,ng me today on studio qualcomm ceo steve mollenkopf. you made it. you have a few things going on. better fight with apple. you fended off a hostile takeover. what did i miss? steve: you haven't missed anything. we are at the center of a lot of key technology, which makes us both interesting from a partner point of view. we tend to not do anything small. ifn i look at it, i say anything, we improve the technologies we work on. taken onuld you have
the job if you had known about all the complex situations you would be dealing with? steve: i have been with the company 24 years. it was clear what we would do next. a lot of these things were issues that we knew about and had to deal with. we are knocking them off the list. you are in a technology company, you have to be prepared for ups and downs. what you tend to do as a ceo's live your life further out in the future than where you are bettingbecause you are on big technology moves. you will always be an optimist or wouldn't remain in the industry. you have to work through near-term issues to get the long-term big changes. emily: how have you evolved as a leader last few years? you told the new york times you are tolerant of uncertainty. tolerant of it. you have to be.
it has been interesting to have the ability to lead the company through these periods of time. if you look at what people think about what goes on at the company, the majority of , and that tends to be the job of the senior group, the ceo, to remove other things so the company can work on those things that drive the long-term value. emily: you certainly know what that is like. for 24e been at qualcomm years, started off as an engineer. bring me back to the early days and how different the world was technology wise then. steve: when i started at qualcomm, this was before digital cellular. if you called somebody, you were calling a place, a home. we have this belief that not only would you eventually call people, the concept of having your own personal number, but you will put a computer in your pocket, and that will have
tremendous ramifications for cellular and industry. ,e participated in every step getting digital sailor to come lte, lowsition to enough power so you could put a computer in your pocket. the part we think 5g represents is the ability for these same technologies, the low-power processing come the ai at the edge of the internet, that will now disrupt almost every other industry. it is the whitest funnel of opportunity in history of the company. emily: do you think people don't appreciate the technology that goes into their phones? does: the average consumer not realize how much technology investment is required in order to make these ecosystems. what qualcomm tends to do is we want to make sure we are
creating the technologies for business eight years from now. to create the technology for a company that has not then born yet. i don't think people realize how early you have to work on it. for example, the dig investments two to three years ago. we said we wanted to be the leader and invested in that. emily: when will i be able to make a 5g call from my phone and be 100 times faster? steve: the first half of next year, you will see that rollout worldwide. second half, you will see it very prevalent. of course, building into 2020. emily: how big of a part of qualcomm's business will that be? steve: a tremendous part. what we are about is how do we take the roadmap of cellular, delivered at scale on a global basis, then how do we
scale that into new industries, self driving cars, the ability for a car to be connected to every other car? that allows it to see around corners. that is a big change in the way the logistics flow and cities will work. same thing with health care. emily: how will my life be different come the world be different? steve: you will get access to more bandwidth at a cheaper cost. the number of companies that can provide you service at a very come a very high rate, meaning equivalent to your wired internet at home, be available in your home, but also outside your home, will go up a lot. you will see competition between the cable companies and the wireless companies, and it will really change the landscape. emily: we reported china is
considering merging the second and third largest telecom companies. there are great concerns this will give china an advantage in 5g. are you concerned about that? steve: not so much. i don't see east-west competition. emily: what about south korea, japan? you don't see a risk to u.s. competitiveness in this arena? steve: we are partners of choice. europe is also quite aggressive as well. we see that if you are the technology leader, your problem are not is my markets big enough. your problem is how do i scale this quickly? there is so much demand for it. that is a good problem to have if you are a company. ♪ steve: there is probably no better opportunity and partner for qualcomm and to work with apple. ♪ apple. ♪
that touches the lives of billions of people. you have been in iphones up to this point, yet people don't know qualcomm. does that bother you? of ourno, it is part success. our job is to make the technology available to people. we purposely stay behind their brand. we want to be a great partner to enable them to be successful. emily: let's talk about apple. for a long time your biggest customer, and now your biggest nemesis. how would you describe your relation with apple? steve: we have a dispute over the price of ip. we believe that is moving into a time where our strategy is unfolding and the environment such that you are in a position where a deal could get done. i think thereme, is no better opportunity than partner for qualcomm than to
work with apple. it makes in the technology leader in mobile is partnered with the product leve leader in mobile. eventually you get the disputes figured out and move on. emily: you believe apple will remain a customer? steve: i think so. look, if you have leadership technology, your roadmap will eventually dominate the business relationship tween companies. i think there is no reason why that should be the case. emily: you are taking on the world's most viable company. you have stopped putting your chips in their phones. you say the patents they are paying you for are invalid. how do something so bitter get resolved favorably for qualcomm? steve: bitter may be the wrong term. we have had disputes in the past as well over the price of ip. really than no different than that here. just bigger companies. we are both big companies.
they are a large company, but we are not a small company in terms of executing the strategy we things gett these resolved. sometimes on the courtroom steps, sometimes they don't. the strategy is playing for the way we thought. emily: critics say qualcomm is not articulating its side of the ip story well enough, and your licensing business could be dead in the water. what is your response to that? steve: the data is different. we have hundreds of agreements, many signed in the last three or four years when we have had a number of new agreement signed in china. the outlier are the people who are not paying as opposed to those who are paying. we believe pricing is moving toward stability. our job is to prove that. i think we are confident in our ability to do that. emily: have there been any talks? steve: there have been talks,
but nothing to report on. emily: when can we expect some progress? steve: we have laid out the byedule for the second half the end of this year. legal milestones create an environment for both parties to change their perspective. we don't know whether that will be the case here. if it is, there will be lots of news. a win look like for qualcomm? the ip siteesolve and go back together working on the technology side. that is a typical resolution. we have planned our business assuming that is not the case. for us, it looks like upside. we are confident in our ability to execute either way. emily: you have shied away from letting this get to ugly in public. is that who you are as a ceo, part of the strategy?
steve: remember, big companies have disputes all the time. they don't make it personal. they have complicated relationships. we are in that category. what you see is what you get in terms of how we think about it. emily: that said, you were recently involved in a public broadcom,with a ceo, who tried to take over qualcomm in a hostile bid. the white house blocked it. how did you navigate that? steve: we spent a lot of time listening to shareholders and working through how we could resolve what they wanted us to resolve. one of the big issues that comes up when you are talking about --tile takeover is in this case, it was proven our smart in pretty circumspect to take a cautious view.
ultimately it ended up in preparation for, the u.s. government did what it did. today, it would be very difficult in any type of big merger that requires approval, either in the u.s. or china. the political and farming is quite difficult. ablef the things we were to do is navigate that environment as a company and remove that uncertainty away from our shareholder base. we are pleased how the stock has been performing after we have done it. we will continue to do those things. what was the range of emotions you went through when you found out that was not going to happen? victory? relief? is unprecedented. there is no playbook when something like that happens. the law tells you what you need to do, so we did that and moved forward. our whole mentality is that is
behind us. the real focus is 5g ramp and how do we resolve the apple dispute. emily: part of the reason the deal was blocked as the president saw a national security threat. do you think that threat is real? steve: worldwide qualcomm is a leader in 5g, and they wanted to make sure that is maintained. i'm not sure everybody understands everything that happened there. emily: there was the flip side and qualcomm tried to buy nxp. forwaited for two years approval as trade tensions continue to escalate. the chinese government never said no. they let the deadline lapse and the deal was dead. how big of a blow was that? steve: we have moved beyond it. i was very clear in terms of what we were going to do. it played out not the way we wanted originally, but we moved on and did the right thing as a company.
there is no dramatic change in anybody's if i wish and of the mergers and acquisition ability and china between now to the end of the midterm elections in the u.s. in november. what we decided to do is remove the uncertainty for shareholders , for both companies, and move on. it has proven to be the right decision for us. emily: the chinese government has left the door open and does not seem to will want to take responsibility for ending this deal. could it still happened? steve: the merger agreement has been terminated by both sides. it is not happening. i think it was handled pretty skillfully by all parties. relationship with china is as strong as it ever was. it never became about qualcomm versus china or the other way around. showing up ining
the middle of a large geopolitical issue. sometimes you have to decide to move on. that is what we did. emily: given the business qualcomm does around the world, is a trade for good or bad for the united states, qualcomm? steve: any time there is an issue like this, any industry would prefer it resolved. we are somewhat insulated. we don't have as much impact with tariffs as other people. we always like a stable environment between china and the united states. we think we will get to that point. our business will be strong either way. emily: could the moves the president is making league chinese manufacturers to make their own chips? steve: that is not what we are seeing. the big trend in china is chinese manufacturers want to be global players. anytime there is a technology transition, people try to exploit that. that brings them closer to qualcomm. emily: there has in some
turnover on the board. what is the mandate for the board? resolve the 5g, license disputes, and take advantage of this opportunity coming along with everything being connected. we have had a lot of turnover in the board. ising it in the direction quite healthy come and looking forward to driving that mandate. ♪ you are going to see a tremendous amount of excitement in the mobile space just from the launch of 5g. ♪
offer, paul or someone else come up we would listen to it, but have not heard anything. emily: do you talk with him on a regular basis or are you still engaged with him? steve: no, he left the company. we don't have those conversations. if there is a need for one, we would. emily: part of the argument the hind going private is the licensing business is complex. wraps it would be better outside of public scrutiny. you are making long-term investments and long-term investors need to be patient. went you think about that? steve: it is an interesting argument. if you look at how we have run the company, even with a lot of scrutiny, it is not clear to me there is an advantage one way or the other. you are comparing it against something we have not seen. being do you think private could be equally advantageous to being public? steve: it depends on what the details are.
we are a pretty large company. in order to do that type of deal to me you would take on a lot of leverage. strategicnot open up flexibility, probably constrains it. emily: when will we see qualcomm returning to double digit growth that made this company so popular with investors? steve: near-term, we are focused on two trends. one is the stabilization of the apple relationship one way or the other, and the growth of 5g, both of them we think provides great output. emily: what if apple doesn't go your way? steve: it is something we worry about, but tend to manage the worldwide. we have hundreds of agreements that establish the value, so once we have an opportunity to get in the right form to do that , we will be able to prevail. emily: let's talk about new markets and where you see qualcomm progressing. struggled for
years. you can work a long time on some of these technologies and realize it will not be something you dominate in. gave up on servers. about pcs, cars, drones? about then i think business, i think are we developing technologies that have international demand, and can we scale them into the markets that want them? today, our real focus is on the scaling. the demand is they are. we are starting to see early examples of new customers taking new products. todaye 9000 new customers that we didn't have before, and in the that is up 20x last four years. emily: what does qualcomm look like in 2020. , more focus on
areas outside of mobile. i think you will see excitement in the mobile space from the launch of 5g. it is disruptive in terms of business models for carriers, bandwidth, and how they move forward. emily: will qualcomm still be an independent company? steve: it is too far in the future. what is clear is that any way we can drive value, we will look at it in a but we have a great position from a technology perspective. emily: when do you business will return to normal for qualcomm? steve: i don't think it ever returns to normal. we have never really had a super stable spot. there were always times when people said qualcomm will disappear tomorrow. the fortunate opportunity to work on a lot of those projects. we were able to do the things people said.
i don't know if we will ever be in a super stable position, but a more stable position than the last several years. emily: what is something you that youas ceo in 2018 did not know when you took this job four years ago? steve: you always have to figure out what you want to do. make sure you spend the time on it. if you don't, it will not get done, which is a basic thing, but hard in practice. emily: don't you have people to do those things? steve: if you grow up in the organization, it is easy to do things -- the organization will let you work on whatever you want to work on. you just have to make sure you're working on those things only you can work on. i have learned that over the last four years. it is true when you go through scrutiny or big changes. there are certain things just by the nature of the work structure
the ceo as to make this call or have conviction on this particular topic. you have to set time aside to make sure you know where you are on it. your game plan as a ceo and manager over the next few years knowing you have more uncertainty coming your way and you have to be nimble as the ceo? steve: the first thing we do is acknowledge there were always be uncertainty in the business. for us, the way we mitigate that is to make sure you have technology people want, and if you have fat, you can solve everything else, but first and foremost, that is what we do. we had to make the big call for 5g, we made it several years ago in the middle of all of this uncertainty. this will not be the last call we have to make. the technology roadmap will continue and we have to make sure we are leaders moving forward. we will continue to do that. that is the fun part of the business. we are looking forward to it. emily: steve mollenkopf, ceo of
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rishaad: it is 10:00 p.m. on the eastern seaboard of the united dates. welcome to "bloomberg markets: asia." >> the fed height as expected with indications of more to come. president trump is not fun -- happy. rishaad: trade tariffs having no impact, some say. >> the sliding rupee and the but it may nott, be as bad as it seems. rishaad: the latest company to launch in hong kong shares. the ceo is with us.
>> looks like a rough start for china renaissance today but interesting time in given the fact -- timing given the rate hike. the fed, as well, digesting the statement seen as a modern day exit. let's look at what is going on. tencent, a big decline or so far in the session for the hang seng. looking at positivity from japan, positivity for hong kong, as well. .1%. the nikkei gaining ground. china under a bit of pressure. let's look at what companies are doing on here. it is a situation where we have banks in the crosshairs as to what they do next with the base rate going up in line with