Qualcomm's shares jumped in pre-market trade in New York, after activist investor Jana Partners asked the company to consider spinning off its chip unit from its patent-licensing business.
The chip maker's stock was trading 5.08 per cent higher, to $72.74 (£49.60) at 7.52am EDT on 13 April, IB Times reports.
Hedge fund Jana Partners considers the chip unit "essentially worthless," and spinning it off from patent-licensing business could "restore investor confidence" in the company and unlock shareholder value, Reuters reports.
Jana is one of Qualcomm's largest shareholders with a stake of over $2 billion (£1.36 billion), and it also wants Qualcomm to cut costs, alter its executive pay structure and expedite stock repurchase programmes, according to a letter sent to Qualcomm.
The letter, excerpts of which have been seen by Reuters, said Jana has been engaged in a "constructive dialogue" with Qualcomm over steps the company could take to address a long period of share price under performance.
"We believe that the board and management recognise the need to address its historical under performance and improve investor perceptions of the company," Jana said.
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.
San Diego-based Qualcomm, which has a market value of $114 billion (£77.71 billion), said last month it would buy back up to $15 billion (£10.23 billion) of shares and raise its quarterly dividend.
Qualcomm also said it would continue to return at least 75 per cent of its free cash flow to shareholders annually.