Qualcomm announced it would invest $97 million in Jio Platforms in exchange for a 0.15 percent stake in the company. The American chipmaker will also aid the Indian digital services conglomerate in building its 5G infrastructure.
Why Qualcomm Bought a Piece of Jio Platforms
For Qualcomm, making a strategic pact with Jio Platforms offers several strategic advantages.
For one thing, the Indian corporation operates a wireless carrier called Jio that boasts 400 million domestic subscribers. As such, the company will need a staggering amount of mobile and base station chipsets to bring 5G service to its customers. Neither firm disclosed financial terms of the supply deal, but it will likely provide the San Diego manufacturer with substantial revenue for years to come.
MarketsandMarkets estimates the Indian 5G infrastructure market will be worth $47.775 billion by 2027.
Another key benefit Qualcomm will enjoy by teaming with Jio Platforms is a potential reduction in regulatory hurdles. To protect local businesses and ensure proper oversight, New Delhi has begun drafting laws limiting the influence of foreign tech corporations in-country. However, the chipmaker believes Mukesh Ambani, owner of Jio Platforms parent company Reliance Industries and who has close ties to the local government, will protect their deal from intense scrutiny.
An insider told TechCrunch the semiconductor concern also invested nearly $100 million into Jio Platforms because it would not be affected by mounting Sino-American trade tensions.
Jio Platforms on the Ascent
Qualcomm likely acquired a small piece of the Indian digital services company because it is a good investment.
In April, the subsidiary began a private equity round and has already raised more than every Indian startup combined last year. Presently, Jio Platforms is on pace to capture 48 percent of its domestic mobility market by 2025. The firm’s robust growth and quality leadership helped it attract $15.7 billion in outside funding in the last 12 weeks.
Facebook kicked things off by spending $5.70 billion to acquire a 9.99 percent stake in the corporation in April. Silver Lake Partners, General Atlantic, and Saudi Arabia’s Public Investment Fund followed suit with their own massive cash infusions. Most recently, Intel invested a quarter of a billion dollars into the company for a sub-0.5 percent ownership stake.
As a result, Jio Platforms is now worth an estimated $72 billion. Because its strategic partnerships will bring technologies like 5G to India, the firm is increasing its home market’s value. If Reliance takes its subsidiary public, Qualcomm and its contemporaries will likely reap a significant return on their investments.