♪ >> qualcomm products touched billions around the world. extending to cars and at the forefront of delivering five g networks of the future. -- everydayvery person what qualcomm does and you're likely to get a blank look. then the white house killed the hostile takeover of qualcomm by broadcom, which would have been the largest deal in history. china effectively killed

qualcomm's takeover of the -- of another chipmaker, setting up to have challenges or perhaps new opportunities for qualcomm leadership. joining me today, steve mollenkopf. thanks for being here. steve: thank you. emily: you fended off a hostile takeover, a failed deal this past year, what did i miss? steve: you haven't missed anything. we are at the center of a lot of key technology, which tends to make us both interesting from a partner point of view -- we don't tend to do anything small. when i look at it, this year, if anything, krugman the importance of the technologies we work on. emily: would you have taken the job if you had known the complex situations you're doing with?

steve: yeah. i have been with the company for over to you for years. when i became ceo, it was clear -- what were we going to do next? a lot of these things were issues we know about that we had to deal with. we were knocking them off the list. emily: you had an inkling that it would be a hard few years. aeve: anytime you are at technology company, you have to be prepared for up send downs. what you tend to do as a ceo is live your life further out in the future than where you are living because you are betting on big technology moves. you'll always be an optimist. otherwise, you wouldn't remain in the industry. emily: or couldn't. steve: exactly. you have to work on near-term issues to deal with the long-term changes. emily: you told "the new york times" you are very tolerant of uncertainty. steve: you have to be. it's been interesting to have the ability to lead the company

through these periods of time. at the public, what people think about what goes on in the company, the focus of the company is focused on products, focused on 5g. that is the job of the senior group and the job of the ceo, to remove the other thing so that the majority of the company can work on those things that really drive the long-term value. emily: you know what that is like. you have been working at qualcomm for 25 years, starting as an engineer. tell me how different the world was there, starting technology than? steve: this was before digital cellular. people, you calling were calling a place, a home. we had this believe that, not only would you call people, the concept of having your personal number, but you will put a computer in your pocket and that will have a tremendous ramifications, not only for

cellular, but also for industry. step,ticipated in every whether getting digital cellular to come out, getting people to transition to lte, getting the ,echnologies small enough having low enough power so you can put a computer in your pocket. and then on top of it, what 5g represents, the capability for the cellular roadmap, the lower power processing, the ai in the internet, the connect to me, that will disrupt every other industry. the widest funnel of opportunity in the history of the company. emily: do you think people don't appreciate the technology that goes into your phone? steve: i don't think the average consumer realizes how much technology investment is required in order to make these ecosystems. ist i am referring to qualcomm tends to do. we want to make sure we are

creating the technologies for business, let's say, eight years from now. we are trying to create that has not been treated. on theputting our foot pedal for 5g was two or three years ago. we said, yes, this will be significant and we want to be the leader. emily:sted in it good when will my phone be 100 times faster? steve: you will get that next year, the first half of next year. that will roll out worldwide good second half, you will see it really prevalent and building into 2020. emily: how big of qualcomm's business will that be? steve: it is a tremendous part of it. if you look at what we are really about is how to take the roadmap of cellular, how do we scaler it to cellular on

on a global basis -- things like self driving cars, the ability of a card to be connected and be connected to every other car and allows it to see around corners. that's a big change in the way logistics flow will work. same thing with health care. emily: how will my life be different? steve: near-term, you will have access to much more and with at a much cheaper cost. and the number of companies that can provide you service at a very, very high rate, meeting equivalent to what you get on your wired internet at home, be available in your home and also outside of your home. you will see competition probably between the cable companies, the traditional people who provide you wired internet service, and the wireless companies. it will really change the landscape of it. china is considering merging the second third-largest telecom

company and this will give china an advantage in 5g. are you concerned about that steve: -- are you concerned about that? steve: not so much. emily: what if it is south korea? do you see competitiveness in this arena? steve: we are partners of choice in those launches. don't forget europe. europe is quite aggressive as well. if you are the technology leader, your problem is not are my markets be enough? this is what qualcomm is dealing with -- how do i scale this quickly? there is so much demand for it. that is the issue we are in right now. that is a good problem to have if you are a company. there's probably no better opportunity and partner for qualcomm than to work with apple.

a companylcomm is that touches the lives of millions of people. yet a lot of people don't even know what qualcomm is. does that bother you? steve: no. it's part of our 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, and we don't pick favorites. emily: let's talk about apple. for a long time, this is your biggest customer. now they are your biggest nemesis. how would you describe your relationship status with apple today? steve: we have a dispute over the price of ip. we think that is moving into a period of time where our strategy is unfolding and the environment is such that i think you are in a position where a deal can get done. at the same time, there's probably no better opportunity and partner for qualcomm then to work with apple.

it makes sense that the technology leader in mobile would be partnered with the product leader in mobile. those things tend to work out. . but the way we think about the business, eventually you get the disputes figured out and you move on into a different period. emily: so you believe apple will remain a customer. steve: i think so. i was believe, if you have leadership technology, your roadmap will eventually dominate the business relationship between companies. there's no reason why that should not be the case here. emily: that said, you're taking on the world's most valuable company. they stopped putting your chips in their phones. they say that the patents they are paying you for invalid. how do something so better get resolved favorably for qualcomm? steve: i think it are -- bitter may be the wrong term. we are both big companies. they are obviously a very large

company, but we are not a small company in terms of being able to execute the strategy that we have. but those things get resolved. sometimes, they get resolved on the courts you -- courtroom steps. sometimes they don't. the strategy we are playing for is the way we always thought. your licensing business could be dead in the water. what is your response to that? steve: the data is pretty different. we have hundreds of agreements, many of them signed in the last three or four years, when we have had a number of new agreements signed in china. whooutlier are the people are not paying as opposed to those who are paying. the licensing businesses moving towards a period of stability. our job is to prove that and we are confident in our ability to do that. emily: so are there any talks? steve: there are always talks between the companies.

emily: when can we expect progress? steve: we have always laid out schedule for the second half of this year. a couple of legal milestones hit traditionally. legal milestones create an environment for both parties to change their perspective. we don't know if that will be the case here. if it is, i'm sure there will be lots of news for you. emily: what does a win look like for qualcomm? steve: the normal scenario is that you resolve the ip side and go back together working on technology side. don't know whether that will be the case here, but that is sort of a typical resolution. as you know, we had planned our business assuming that that is not the case. andus, it looks like upside we are confident in our ability to execute either way. emily: you shied away from letting this get to ugly in public. is that part of who you are as a ceo? is part of the strategy not wanting to be in the spotlight?

steve: big companies have disputes all the time. they don't make it personal and they have very complicated relationships. we are in that category with a number of different companies. so what you see is what you get in many respects in terms of how we think about it. emily: that said, you were recently involved in a very public situation with a ceo who does enjoy being in the from broadcom. how did you navigate that? we spent a lifetime listening to shareholders, quite frankly, then working through how we could resolve what they wanted us to resolve. one of the big issues that comes up when you talk about a hostile takeover is deal certainty. in this case, it was proven that our board were pretty smart and circumspect to take a cautious view on that. ultimately, in preparation for

5g, the u.s. government did what it did. i think today, it would be very difficult. thaty type of big merger requires approval, either in the united states or in china, just the political environment is quite difficult. one of the things we were able to do was navigate that environment as a company and remove that uncertainty away from our shareholder base. we are pleased us to have the stock has been performing after we have done it. we have done all the things he said we are going to do and we will continue to do those things. emily: for you as the ceo, what was the range of emotions you went through when you roundup of that was not going to happen? was there victory, relief? you know howt know to react. it's unprecedented in the snow playbook for when something like that happens. thankfully, the law tells you what to do here. so we did that and moved forward. apple mentality now is that that

is behind us. the real focus on the company now is 5g ramp and how do we resolve the apple dispute. emily: part of the reason this deal was blocked was because the president saw a national security threat. steve: if you look worldwide, qualcomm is a leader in 5g. i think they wanted to make sure that that is maintained. unless your everybody really understands what happened there. emily: than on the flipside, qualcomm tried to buy mxp. you'd waited for approval as trade tensions inching you to escalate. the chinese government never said no. they just let the deadline lapse, than the deal was that. how difficult was that? steve: we were very clear -- in fact, i was very clear in terms of what we were going to do. it played out not the way we wanted originally, but we lived beyond it and did the right thing is a company. there's no dramatic change, at

least our valuation or anybody's valuation, of the m&a action between now and probably till the end of the midterm elections in the united states, so the november timeframe. remove decided to do was the uncertainty for our shareholders, for both companies, and move on. it's proven to be the right decision, at least for us. emily: the chinese government has sort of left the door open and does not want to take the responsibility for ending this deal happening. do you think it could still happen? steve: the merger agreement has been terminated by both sides. so it's not happening. i think it was handled skillfully by all parties. we feel that our relationship with china is as strong as it ever was. it never became about qualcomm versus china or the other way around. what it really was his we had bad timing, showing up in the middle of a large joe political

issue. sometimes you have to decide to move on and that is -- large geopolitical issue. sometimes you have to decide to move on and that is what we did. emily: do you think a trade is good or bad for the united states? is a good or bad for qualcomm? steve: any industry would tell you they would prefer to have it resolved. we are somewhat insulated or we don't have as much impact from tariffs that others have your that said, we -- have. that said, we have a stable relationship with china. our business will be strong either way. emily: could the moves the president is making lead the chinese to make their own chips? steve: that is not what we are seeing. the trend in china is that the manufacturers want to be global players. that brings them closer to qualcomm rather than farther

away. emily: what is the mandate to you from the board? steve: drive 5g, resolve the remaining license disputes, and really take advantage of this opportunity that is coming along with everything being connected. we have had a lot of turnover on the board, moving in a direction that i think is quite healthy, and looking forward to driving that mandate. ♪ you will see a tremendous amount of excitement in the mobile space just from the launch of 5g.

emily: the takeover drama is not over. this is 70 you worked with three years that you know very well. steve: -- this is somebody you worked with for years that you know very well. steve: we have not heard

anything. emily: the you talk with him on a regular basis? are you still engaged with him? steve: he has left the company. we really don't have those type of conversations. but if there was a need for one, of course, we would. we know each other well. emily: perhaps it would be better outside of public scrutiny. you are making these long-term investments that will take some time to pay off and investors need to be patient. what do you think about that argument? steve: it's an interesting argument. by and large, if you look at it in practice, how we have run the company, even with a lot of scrutiny, we have always done those things. it is not clear to me that there is an advantage when we or the other. you are comparing against something that we have not seen. it's hard for me to say. emily: do you think being private could be equally advantageous to being public? steve: it always just depends on what the details are. we are 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 flex ability. . it probably constrains it. emily: when will we see qualcomm return to double-digit quarterly growth that made this company so popular with investors? steve: near term, we are focused on two trends that help that. one is stabilization of the apple relationship, one way or the other. and of course, the growth of 5g. both of them provide great output. emily: what if apple doesn't go your way? is that something that keeps you up at night? steve: it is something that we worry about, but we tend to manage that. worldwide, we have hundreds of agreements that establish the value. once we have an opportunity to get in the right forum to do that, if we have to go that far, we will be able to prevail. emily: the sock about new markets and where you see qualcomm progressing. intel struggle to get into

mobile and never worked it out. you can work on these technologies and find out that it is something that you never dominate. what about pcs, cars, and drones? steve: when i think of the business, i think of two things. 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 there. we are seeing early examples of new customers taking your products. i think we have 9000 new customers today that we didn't have before. that is up 20 x in the last four years. emily: what does qualcomm look like in 2020? steve: you will see 5g, focus on

more areas outside of mobile. i'll be honest with you, you will see more excitement in the mobile space just from 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 it forward. emily: will qualcomm still be an independent company? steve: it's too far the future. what is very clear is that, any way that we can drive value, we will look at it. but we have a great position to be in from a technology perspective for sure. emily: when you think business will turn to normal? steve: i don't think it will. if i look back at the 24 years of being in the company, we never really had a super stable spot. there were always times when people said qualcomm would disappear tomorrow. you will never be good at this technology are that technology. i have had the fortune opportunity to work on this project to propose things wrong, meaning that we were able to do other things that people said. i don't know if we will ever be

in a student -- super stable position. but we will be in a more stable position that we have been over the last several years. amalie: what is something you know now as a ceo in 2018 that you did not know when you took this job four years ago? what is something you have learned? steve: you've always got to figure out what you want to do. make sure that you spend the time on it. . if you don't spend the time on it, it won't get done, which is a very basic thing. it's hard to do in practice. emily: don't you have your people to do those things? steve: if you grow up in the organization, it is easy to do things -- the organization will you work on whatever you work on. you just have to make sure that you are working on those things that only you can work on. 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 work structure, the ceo has to make this call or has to make

eviction on this particular topic. you've got to set time aside so you know where you are on it. emily: what is your game plan as a ceo and a manager over the next three years, knowing you have a lot more uncertainty coming our way and that you have to been able as a ceo? thing we do ist acknowledge that there will always be uncertainty in the business. frost, the way we mitigate that is make sure that you have technology that people want. if you have that, you can solve everything else. first and foremost, that is what we do. by the way, we had to make those calls -- for example, the big call for 5g we made several 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 have to make sure that we are the leaders moving forward and we will continue to do that. that is the fun part of the business. we are looking forward to it. emily: steve mollenkopf from

qualcomm, it has been good to have you here on the show, in the middle of all you have going on. steve: thank you. ♪

♪ carol: welcome to "bloomberg businessweek." i'm carol massar. jason: i'm jason kelly. we're joining you from bloomberg headquarters in new york. carol: this week, the future of retail. e-commerce giants amazon and walmart are after global expansion. next stop on the battleground, india. jason: plus, sears files for bankruptcy.