Qualcomm's patent advantage makes domestic mobile phone manufacturers lose their choice and bargaining power in cooperation, and anti-monopoly investigation will change this situation.
Mobile phone chip giant Qualcomm is facing a huge challenge in the Chinese market: the National Development and Reform Commission ("NDRC") is investigating its alleged monopoly.
It is reported that with a large patent pool and years of technical advantages, Qualcomm has an absolute advantage in the negotiations with Chinese mobile phone manufacturers, the latter has no right to choose and bargain. The NDRC believes that the interests of some Chinese mobile phone manufacturers may be damaged as a result.
Since the Spontaneous Reform Commission launched an investigation into Qualcomm's monopoly, Qualcomm President Derek Aberle has led several Qualcomm vice presidents and lawyers to accept the NDRC's price supervision and inspection and antitrust bureau investigations.
An industry source revealed that the NDRC investigation will announce the results in the near future. Although Qualcomm did not respond to this, when it announced its latest quarterly earnings report, Qualcomm reminded investors that it lowered its recent license business performance expectations.
In this regard, many Chinese mobile phone manufacturers in the private communication with Tencent Technology have expressed their optimism, I hope to see the cost reduction, but the official attitude will not affect the follow-up cooperation with Qualcomm, because Qualcomm is currently The technical advantages of the 4G field are much higher than other competitors.
Qualcomm's advantage stems from the first force
Qualcomm is still emphasizing its contribution to the communications field. Since the company's inception, Qualcomm has invested more than $30 billion in research and development expenses. Moreover, Qualcomm's annual revenue of 20% is used for technology research and development, while Huawei is 10%. For 4G LTE, Steve Morenkov said, "Qualcomm has contributed to the global LTE standard, including TD-LTE and FDD-LTE," and has assisted Chinese telecom operators in deploying LTE. However, this technology is only part of a broad range of intellectual property rights.
Qualcomm began investing in the development of OFDMA technology as early as 2000. This technology is considered to be the core technology for the future development of LTE. In 2006, Qualcomm acquired Flarion, a well-known wireless broadband technology company, which is recognized by the industry as a leader in OFDMA-related technologies and commercial systems. However, it was not until the end of 2008 that the technical specifications organization 3GPP released the LTE specification for the first time.
Therefore, Qualcomm has a lot of accumulations in the earliest and most basic patents of OFDMA systems, and most of them are suitable for FDD-LTE and TD-LTE. Moreover, Qualcomm has been at the forefront of technology research and development in multi-mode and multi-frequency.
These made Qualcomm once the only chip company to meet China Mobile's five-mode ten-frequency requirements for 4G terminals. Therefore, in the negotiations with Chinese mobile phone manufacturers, Qualcomm has a dominant position, the former has no right to choose and bargain. The NDRC believes that the interests of some Chinese mobile phone manufacturers may be damaged as a result.
From the beginning of TD-SCDMA in the 3G era to the TD-LTE of 4G, the Chinese government and enterprises have emphasized that the technology has independent intellectual property rights on many occasions. Although the technical difference between TD-LTE and FDD-LTE is not large, only about 5%, but the TD industry chain often carries the revitalization of the national telecommunications industry. From the priority issue of TD-LTE licenses, it can be seen that government agencies such as the Ministry of Industry and Information Technology support the TD industry chain, and it is clear that Qualcomm's patent license fees in this field will be compromised.
Some analysts said that LTE technology, Qualcomm, Ericsson, Huawei HiSili, etc. have patent swaps. However, for most mobile phone manufacturers in China, although there are some unique patent technologies in product function design, the patent reserve in basic communication technology is almost negligible, which makes it more like a product assembly plant.
Most Chinese manufacturers are constrained by this. That is to say, in addition to Huawei's consistent rejection of Qualcomm in its own products, the high-end products of other Chinese manufacturers have basically reached a cooperation with Qualcomm, so its production capacity and product release cycle have been restricted by upstream manufacturers. .
On the one hand, the price of Qualcomm chips is several times higher than other chip makers. Take Huawei's HiSilius as an example. When it comes to internal settlement, the price of an 8-core LTE chip is only $13, while Qualcomm's equivalent product is at least several times.
What's more, MediaTek and other chip manufacturers have to pay a certain patent license fee to Qualcomm. This part of the price depends on the annual negotiations between the two parties. Manufacturers such as MediaTek are gradually catching up with Qualcomm, and such competition will lead to an increase in licensing fees. On average, it is usually 10% of the price.
A Huawei HiSilience employee revealed that although the two sides had patent replacements, the dialogue between the two parties was not in the same order of magnitude.
On the other hand, some PTPCs are dissatisfied with Qualcomm's supply strategy due to the limited supply capacity of Qualcomm products during early production ramps.
Qualcomm's high-end chip products began with the Snapdragon 800 processor, especially its latest 801 series, which had encountered tight resources in the early stage of supply. For mobile phone manufacturers, the important delivery time is not the price, so the real-time price difference is 10 dollars, and the manufacturer will not have any objection. However, some analysts told Tencent Technology that mobile phone manufacturers are currently dissatisfied with Qualcomm's unfair decision-making.
Therefore, analysts believe that the above reasons or one of the reasons for this round of investigation and reform commissioned Qualcomm monopoly.
The monopoly investigation may help tear up the gap. Mobile phone maker OPPO told Tencent Technology that "government departments can reduce Qualcomm's patent fee fees by measures, which is good for us."
The official website of the National Development and Reform Commission showed that substantial progress has been made in meeting with senior executives such as Qualcome President Drake Abel. On April 3, the first meeting between the two sides only "frankly exchanged opinions", but after the second meeting on May 8, the NDRC said that it had communicated on the alleged violation of the Anti-Monopoly Law.
On July 11, after Qualcomm and the National Development and Reform Commission completed the third meeting, the NDRC has clearly identified the specific matters of the investigation, including the use of the whole machine as the basis for calculating the license fee, bundling the standard necessary patents and non-standard essential patents, and requesting permission. People carry out free counter-licensing, continue to charge for expired patents, bundle patent licenses with sales chips, refuse patent licenses for chip manufacturers, and attach unreasonable trading conditions to patent licenses and chip sales.
The National Development and Reform Commission said that the investigators conducted on-site investigations and produced transcripts of inquiry.
The Financial Times quoted Qualcomm as saying that antitrust investigations have led some hardware manufacturers to suspend new licenses to use their technology, including the technology used in all chips used in 3G and 4G devices.
Analysts said that Qualcomm's involvement in the NDRC investigation is not common among Chinese multinationals, which means that Qualcomm's new leadership is still difficult to handle China's affairs.
Steve Morenkov came to China this time and met Chinese Premier Li Keqiang, who announced the news at a Qualcomm press conference yesterday, but this news has not yet brought a significant turn to the Qualcomm crisis. .
However, due to the large-scale mass production of 4G products of chip makers such as MediaTek, it still takes time, and there is still a gap in product maturity from Qualcomm. Therefore, before the NDRC has yet to announce the monopoly sanctions against Qualcomm, more manufacturers still need to try to win over Qualcomm.
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