Qualcomm’s second-in-command Derek Aberle – the long-time head of company’s embattled patent licensing arm -- is stepping down as of Dec. 31, the company announced late Thursday.

Aberle, 47, is bowing out as Qualcomm’s president at a time when the company’s $7.7 billion patent licensing business is under a fierce legal assault from Apple and anti-trust regulators.

A company spokesman said Aberle’s decision to leave is amicable and not due to the current troubles surrounding patent licensing.

Qualcomm has two businesses. Its sells semiconductors that power today’s smartphones and other devices, and it licenses its portfolio of thousands of core cellular patents to smartphone makers.

While the chip business generates most of Qualcomm’s revenue, patent licensing accounts for about three-quarters of its profit.

“Under his talented leadership, the Qualcomm Technology Licensing division has significantly grown both revenues and profits, established its 4G licensing program and enabled significant competition across the industry,” said Chief Executive Steve Mollenkopf in a statement. “I believe the company is well positioned to build on Derek’s record of success to deliver solid results in the future.”

A lawyer, Aberle joined Qualcomm in 2000. He became a top executive in Qualcomm’s patent licensing arm in 2006, rising to become president of the overall company in March 2014.

Aberle is credited with helping navigate tricky negotiations with China’s anti-monopoly agency, which probed Qualcomm’s business practices for nearly two years before reaching a settlement in early 2015.

Qualcomm paid a $975 million fine and lowered royalty rates for devices sold within China. But the settlement allowed Qualcomm to retain its licensing business model of collecting royalties based on the price of the entire device.

Wall Street analysts viewed the deal as a win for Qualcomm – in part because the company was able to convince Chinese regulators that its patents involve system-wide technologies that are implemented throughout the smartphone instead of on a single chip.

Today, Qualcomm’s licensing business model is under fire anew. South Korea’s anti-trust regulator fined Qualcomm more than $900 million and is demanding sweeping changes in the way it licenses patents. Qualcomm has appealed to the Seoul High Court.

The U.S. Federal Trade Commission alleges Qualcomm leverages its market leadership in cellular modem chips to coerce smartphone makers into overpaying for royalties in violation of anti-trust laws.

In January, Apple sued Qualcomm and cut off royalty payments, costing Qualcomm about $500 million per quarter. Among other things, Apple claims Qualcomm’s per-device royalties enable it to collect fees on innovations that it had nothing to do with.

Qualcomm counters that royalty caps and other mechanisms limit the amount it collects per phone. The cellular industry has licensed patents at the device level for 30 years, and its core cellular technologies are what breathe life into smartphones with high speed, ubiquitous connectivity.

With Aberle’s departure, Qualcomm said Alex Rogers, executive vice president and current head of patent licensing, will report directly to Mollenkopf. Rogers joined Qualcomm in 2001 and has been in charge of Qualcomm’s technology licensing arm since March 2016.

Qualcomm announced Aberle was leaving after markets closed. Its shares ended trading Thursday up 26 cents at $52.49 on the Nasdaq exchange.

By: DocMemory
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