Activist investor Jana Partners asks chip maker Qualcomm to consider breakup

Activist investor Jana Partners has reportedly asked chip-maker Qualcomm to consider spinning off its chip unit from its patent-licensing business.

New York-based Jana, one of Qualcomm's largest shareholders, has also asked Qualcomm to cut costs, expedite stock repurchase programmes and make changes to its executive pay structure, financial reporting and board of directors, The Wall Street Journal reported, citing a quarterly letter that will be sent to Jana investors on 13 April.

Qualcomm, based in San Diego, is the world's largest maker of chips used in mobile phones. The $114bn (£78bn, €108bn) firm also earns patent royalties for most smartphones sold since the roll out of third-generation (3G) networks. About two-thirds of the firm's profit comes from such royalties.

Last month, analysts at Arete Research Services said in a note to clients that the chip-making business could be valued at $74bn and the patent business at $87bn.

Arete also suggested that an independent Qualcomm chip business could be attractive to potential suitors such as Intel, or could itself try to buy US-based fabless semiconductor firm Broadcom.

While Qualcomm has defended its corporate structure, it has said it regularly evaluates whether it makes sense to keep the chip and patent-licensing businesses together.

Last month, Qualcomm Chief Executive Steve Mollenkopf said his firm continues to believe that the businesses support each other in important ways.

In China, for instance, having both businesses helped it in talks with Beijing during the antitrust investigation, which it settled by agreeing to pay nearly $1bn in fines and modifying its royalty rates on handsets sold in that country.