♪ emily: qualcomm's products touch the lives of billions around the world. it's the biggest maker of chips and smart phones, expanding to cars and at the forefront of 5g networks of the future. but ask an everyday person what qualcomm does and you will likely get a blank look and yet, qualcomm has been in business headlines almost constantly over the last couple of years because of a dispute with apple, qualcomm's biggest customer. then the white house killed a hostile takeover of qualcomm by broadcom, which would've been the largest tech deal in history. in the midst of a trade war,

china effectively killed the takeover of another chipmaker, all setting up challenges or perhaps new opportunities for qualcomm readership. joining me today is qualcomm ceo, steve mollenkopf. thanks for being here. steve: happy to be here. emily: you have a few things going on. you are in bitter lawsuits with apple around the world. you fended off a hostile takeover of your company, you had a failed deal this past year. what'd i miss? steve: well, you haven't missed anything. it has been interesting. i would say we are at the center of a lot of key technology which tends to make us interesting from a partner point of view. we don't tend to do anything small. when i look at it, if anything proved the importance of the technologies that we work on. emily: so, would you have taken the job if you had known of all the complex situations you would be dealing with. steve: yeah, it was clear we

-- when i became ceo it was clear we knew what we wanted to do next and so a lot of these things were issues that we know about and we have to deal with. we are knocking them off the list. you had an inkling it was going to be a few hard years. steve i think anytime you're a : technology company, you have to be prepared for ups and downs. and what you tend to do as the ceo, i think live your life further out from where you are living. you're betting on technology moves. you're always an optimist. otherwise you wouldn't remain in the industry. emily: or couldn't. steve: correct. you have to work through near-term issues to get to the long-term changes. emily: how have you evolved as a leader the last few years. you told the new york times you are tolerant of uncertainty. steve: i'm very tolerant of it. i think i have to be. i think it's been interesting to have the ability to lead the company through these hotels of

time. if you look at what people think about what goes on in the company majority of the company focused on products, driving 5g and that tends to be the job of the senior group, and certainly the job of the ceo, is to remove the other things so that the others can work on things that really drive the long-term value. emily: you certainly know what that's like. you've been working at qualcomm for 24 years. bring me back to the early days and how different it was then. steve: when i started, this was before digital cellular. people would work -- if you called somebody, you were calling a place, you were calling a home. we had this belief that not only would you eventually call people, the concept of having your own personal number, but we said we are going to put a computer in your pocket and that will have tremendous ramifications.

not only for cellular but for industry. we anticipated every step with her and was getting digital cellular to come out, getting people to transition to lt, getting the technologies small low enough power so that you could put a computer in your pocket and on top of it, the part we think 5g represents is the ability for these same technologies or the cellular roadmap, low-power processing, ai at the edge of the internet, the connectivity, that is going to disrupt every other industry. so for us it's probably the widest funnel in the history of the company. emily: you think people don't appreciate the technology that goes into their phone? steve: i think the average consumer doesn't understand how much technology is required in order to make these ecosystems. when i say ecosystem, i'm saying what qualcomm tends to do is we want to make sure that we are creating the technologies for

business eight years from now. we are trying to create the technology for a company that hasn't even been born yet. i think people don't realize how early you have to work on it. for example, the big investments that we did in 5g were about two or three years ago. because we said this is going to be significant. we invested in that. emily: when will i be able to make a 5g phone call? steve: you'll get that next year. the first half of next year you will see that rollout. worldwide. the second half, it will be very prevalent in going into 2020. emily: how big of qualcomm's -- how big a part of qualcomm's business will that be? steve: i think it's a tremendous part of it. how do we take the roadmap of cellular and distribut it to a -- and deliver it to cellular at

scale on a global basis, then how do we scale into new , industries? things like self driving cars. the ability for a car to be connected and to be connected to every other car allows it to see around corners. and that's a big, big change in how logistics work and how cities work. same thing with health care. emily: how will my life be different? how will the world be different? steve: near-term, much more access to more bandwidth at a cheaper cost in the number of companies that can provide you service at a very high rate, meaning the equivalent to what you get on your wired internet at home will be available in your home and outside of your home. they'll go up by a lot. you'll see some competition between the cable companies who provide you internet service and the wireless companies and they will really change the landscape. emily: we've reported that china is considering merging the second and third largest telecom companies. there's a great concern this

will give china and advantage with 5g. are you concerned? steve: not much. i'm not sure i see an east west competition where i don't think there will be a lot of winners. emily: what if it's south korea or japan? you don't see a risk? steve: we are partners of choice for all of those launches. don't forget europe. europe is quite aggressive as well. if you're the technology leader, your problem is not are my markets big enough? your problem is how do i scale this quickly because there is so much demand for it. that's the issue now. that the good problem to have with your company. -- to have if you are a company. there's probably no better opportunity and partner for qualcomm than to work with apple. ♪

emily: qualcomm is a company that touches the lives of billions of people. you've been in most iphones of -- up to this and a lot of point. people don't know what qualcomm is. does that bother you? steve: no. i think it's part of our success. our job is to make the technology available to people who purposely stay behind their brand. what we want to do is be a great partner to enable them to be successful and we don't pick favorites. emily: let's talk about apple. for long time, this is your biggest customer and now they're your biggest nemesis. how would you describe your relationship with apple today? steve: we have a dispute over the price of ip. we think that's moving to a period of time where our strategy is unfolding in the environment is such i think you're in a position where it'll get done. at the same time, i think there is probably no better opportunity and partner for qualcomm band to work with apple. it makes sense that the technology leader in mobile would be partnered with the

technology leader. and those things tend to work out. the way we think about the business is eventually you get the disputes figured out. emily: so, you believe apple will remain a customer? steve: i think so. look, if you have leadership technology in your roadmap will eventually dominate. i think there's no reason why that shouldn't be the case. emily: you're taking on the world's most valuable company. they've stopped putting your chips in their phone and they say the patents they are paying you for are invalid. how does something so bitter get resolved favorably for qualcomm? steve: well, i think bitter may be the wrong term. we've had disputes with licensees in the past as well over the price of ip. it's no different here. it's just bigger companies. they're obviously a very large company, but we're not a small company in terms of being able

to execute strategy. those things will get resolved. i think they get resolved on the courtroom steps, sometimes they don't. we don't know which way it's going to go here, but the strategy is playing the way we thought. emily: that said, there are critics that say qualcomm is not articulating its side of the ip story enough and it could be dead in the water. what's your response? steve: the data is pretty different. we have hundreds of agreements, many of them signed in the last three or four years when we've had a number of new agreements signed in china. the outlier for people who are not paying as opposed to those who are. we think the licensing is moving toward a period of stability. our job is to prove that and i think we are confident in our ability to do that. emily: have there been any talks?

steve: there are always talks between the companies but really nothing to report on. emily: so when could we expect some progress? steve: we've always laid out the schedule that the second half of this year, a number of legal milestones hit. legal milestones hit for parties to change their perspective. we don't know that will be the case here. if it is, i'm sure there will be lots of news for you. emily: how about this? what does a win look like for qualcomm? steve: the normal scenario is that you resolve the ip side and then go back to working on the technology side. don't know if that's going to be the case here, but that's sort of a typical resolution. as you know, we have planned our business assuming that is not the case and for us, it looks like upside and i think we are confident in our ability to

execute either way. emily: you've certainly shied away from letting this get too ugly in public. is that part of who you are or strategy? not wanting this to be in the spotlight. steve: first of all, it is very much what is going on. big companies have disputes all the time. they don't make it personal. they have very complicated relationships. we are in that category with a number of companies. what you see is what you get in terms of how we think about it. emily: that said, you were recently involved in a very public situation with the ceo who does not enjoy being in the spotlight and that is the ceo of broadcom. the white house blocked it. how did you navigate that? steve: we spent a lot of time with shareholders and working through with how we could resolve what they wanted us to resolve. one of the big issues is deal certainty. i think in this case, it was

proven that our board were pretty smart and i think circumspect to take a cautious view on that that ultimately ended up in preparation for 5g. the u.s. government did what it did. i think today it would be very difficult in any type of big merger that requires approval in the united states, just the political environment is quite difficult. one of the things we were able to do is navigate that environment as a company and remove that uncertainty away from our shareholder base and we are pleased with how the stock has been performing. we've done all the things we have said we are going to do and we're going to continue to do those things. emily: for you as ceo, what was the range of emotions you went through when you found out that wasn't going to happen? relief? steve: i don't you know how to react. it's unprecedented. there's no playbook when something like that happens, but luckily the law tells you what you need to do, so we did that and move forward. i think that mentality is behind us.

the real focus is the 5g and how we resolve that. -- how do we resolve the apple dispute. emily: part of the reason it was blocked was because the administration and the president saw a national security threat. do you think that threat is real? steve: if you look worldwide, qualcomm is a leader in 5g and i think they wanted to make sure that maintained. but quite frankly, i'm not sure anyone really understands what happened there. then there was the flip side and -- emily: then there was the flip side and qualcomm tried to buy mxp. and you waited two years. the chinese government never said no or if they just let the deadline last in the deal was effectively dead. how big a blow was that? steve: we moved beyond it. i was very clear in terms of what we were to do and it played out not the way we wanted to. there's really no dramatic change, at least our evaluation

of the actionability in china between now and probably the end of the midterm elections. so november timeframe. what we decided to do was remove the uncertainty for shareholders, remove the uncertainty for both companies and move on and it's proved to be the right decision for us. emily: the chinese government has left the door open and doesn't seem to want to take responsibility for ending the possibility of this happening. do you think it still could happen? steve: the merger agreement has been terminated by both sides and so it's not happening. but i'll just remind you, i think it was handled pretty skillfully by all parties. we feel like our relationship is as strong as it ever was. it never became qualcomm versus china. or the other way around. we had bad timing in terms of showing up in terms of large .eopolitical issue

sometimes they show up and you have to decide to move on. and we did. emily: given the business that qualcomm does, do you think at trade war is good or bad and is it good or bad for qualcomm? steve: i think any industry would tell you they prefer to have it resolved. we're somewhat insulated or don't have as much impact. on tariffs like other people had. but that being said, we like to have a stable environment and we think we'll get to that point. our business will be strong either way. emily: could the move the president is making lead to chinese manufacturers make their own chips? steve: that's not what we're seeing. what we're seeing is that the big trend in china is that the chinese manufacturers want to be global players. anytime there's a technology transition, people try to exploit that internationally.

that brings them closer to qualcomm versus farther away. emily: there has been some turnover since broadcom. what is the mandate? steve: drive 5g and resolve the few remaining license disputes. and to really take advantage of this opportunity that's come along with everything being connected. we've had a lot of turnover and i think moving in a direction that is quite healthy and looking forward to driving that mandate. ♪ steve: you're going to see a tremendous amount of excitement in the mobile space just from the launch of 5g. ♪

emily the takeover drama is : still not over because you've got paul jacobs, former ceo and some of the founders trying to take the company private. what's the status of that? this is someone you worked with for years and that you know very well. steve: we haven't heard anything actually. it's been very quiet. if anyone came up with an offer, paul or someone else, we would

give it care, but we haven't heard anything about it. emily: do you talk with him on a regular basis or are you still engaged? steve: no, he's left the company so we really don't have those types of conversations. but if there were in need for one, of course we would we know each other well. emily: part of the argument behind going private is the licensing is complex. perhaps it would be better outside of public scrutiny. you're making these long-term investments that will take time to pay off and investors need to be patient. what you think about that? steve: i think it's an interesting argument. by and large, in practice, how have we run the company? even with a lot of scrutiny we've done those things. it's not clear to me there is an advantage one way or another. you're comparing against something we haven't seen, so it's hard for me to say. emily: do you think it could be advantageous to be private? steve: it always depends on what the details are. if you look, we're a pretty large company. in order to do that type of

deal, you would take on a lot of leverage. that doesn't open up strategic flexibility. emily: so, when will we see qualcomm returning to the double-digit quarterly growth that made this company so popular with investors? steve: well, i think near-term we are focused on the stabilization of the apple relationship and the growth of 5g. both of them we think provide great output. emily: what if apple doesn't go your way? i mean, is that something that keeps you up at night? steve: of course that's something we worry about, but we manage that. worldwide, we have hundreds of agreements that establish the value. we feel once we have an opportunity to get in the right forum, we will be able to prevail. emily: let's talk about new markets and where you see qualcomm progressing. intel struggled for years to get

into mobile and never quite figured it out. you can work for a long time of these technologies and realize it's not going to be something you dominate in. qualcomm already gave up on servers, for example. what about your efforts in pcs, cars, drones? steve: i look at all of them and think they're all pretty interesting. and i think of the business, i think of two things. i think are we developing technology that has international demand and can we scale them into the markets? today, our real focus is on the scaling. the demand is there. we are seeing early examples of new customers taking new products. give you a sense, i think we have 9,000 new customers today that we did not have before and i think that is up 20x in the last four years. emily: so what does qualcomm look like in 2020? steve: a lot of focus on 5g and more focus on the areas outside of mobile. i'll be honest with you, i think

you'll see a lot of excitement in the mobile space in the launch of 5g. it is very disruptive. in terms of the business models of carriers, how much bandwidth they get, and the ability to move forward. it's going to be an exciting time, we think. emily: will qualcomm still be an independent company? steve: i think it's too far in the future. what's clear is that anyway way we can drive value, we will look at it, but we have a great position to be in. emily: when do you think business will return to normal? steve: i don't think it ever returns to normal. i look back at the last 24 years of being in the company. we've never had a really stable spot. there were always at times when people said qualcomm was going to disappear tomorrow. people told us you'll never be good at this technology or that technology. i had the fortunate opportunity to work on a lot of projects. we were able to do the things people said. so, i don't know if we are ever going to be in a super stable position, but we'll certainly be

in a more stable position from the last several years. emily: what's something you know now today as a ceo in 2018 that you didn't know when you took the job four years ago. steve: you have to figure out what you want to do. make sure you spend the time on it because if you don't spend the time on it, it's not going to get done. that's a very basic thing, but it's hard to do in practice. emily: don't you have your people to do those things? steve: what happens is, if you grew up in the organization, it is very easy to do things that -- the organization will let you do whatever you want to work on. you have to make sure you are working on those things you want -- working on the things only you can work on. i have learned that over the last four years. it is certainly true when you go through a period of tremendous scrutiny or big changes. there are certain things just by the nature of the organization structure where the ceo has to make that call.

or have conviction on this particular topic. i have learned that you've got to set time aside to make sure you know where you are on it. emily: what is your game plan as a ceo and manager knowing you have more uncertainty coming your way? and you have to be nimble? steve: i think the first thing we just acknowledge there's always going to be uncertainty. for us, the way we mitigate that is to have technology that people want and if you have that, you can solve everything else. first and foremost, that's what we do. by the way, we've had to make those calls. for example, the big calls for 5g, we made years ago in the middle of all this uncertainty. this will not be the last call that we have to make. the technology roadmap will continue. we've got to make sure that were the leaders moving forward and we'll continue to do that. that's actually the fun part of the business and we are looking forward to it. emily: steve, thank you so much for joining us. it's been great to have you here on the show in the middle of all

you have going on. steve: thank you. ♪ xfinity mobile is a new wireless network

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♪ eric: coming up on "bloomberg best," highlights from the 2018 bloomberg global business forum. leaders in politics, business, and finance gathered to discuss issues of critical importance. >> the post-brexit britain will be an unequivocally pro-business britain. >> there's a lot going on in the world, and at the moment, markets don't care. >> competition is the most important driver for innovation. >> globalization has been a win-win situation of the world. eric: they shared candid and exclusive insight on their goals, hopes, concerns. >> we are working very hard to reposition your economy. >> women are likely to be more affected than men by the impact of artif