Huawei’s chips are in a supply crisis. In addition to being unable to directly purchase finished chips produced under the leadership of U.S. technology, OEMs involving U.S. technology are also not allowed. In the shadow of U.S. technology hegemony, high-end industries such as chips are still stuck.
The United States has directly or indirectly cut off supplies to Huawei through restrictions on upstream and downstream companies in the chip industry chain such as TSMC, Qualcomm, and ASML.
In the field of mobile CPU and communication technology, Qualcomm has been the dominant player for many years.
Qualcomm is a global leader in 3G, 4G and 5G technology research and development. It has provided technology licenses to many manufacturers around the world, involving All brands of telecommunications equipment and consumer electronics equipment in the world. In China, Qualcomm has been doing business for more than 20 years, and its cooperation with Chinese ecological partners has expanded to many industries such as smartphones, integrated circuits, Internet of Things, big data, software, and automobiles.
Qualcomm’s foundational technologies empower the entire mobile ecosystem and are found in every 3G, 4G and 5G smartphone.
Qualcomm’s current market value reaches US$1,376, with revenue in 2019 reaching US$24.3 billion. Qualcomm has world-leading technical advantages in communication technology, CPU architecture and manufacturing processes. Under Qualcomm's technical barriers, even Apple, whose market value is ten times that of Qualcomm, has to pay Qualcomm the "Qualcomm tax."
1) Qualcomm’s chip business
Qualcomm 3, 4 and 5G mobile phone chips are basically It accounts for most of the mobile phone chip market. Whether it is domestic mobile phone manufacturers or foreign mobile phone manufacturers, there are not many choices in the field of mobile phone chips. Apart from Qualcomm, only Samsung and MediaTek are left. In addition, Apple and Huawei's chips have poor performance. , but only for personal use and not for sale.
In terms of performance and communication capabilities, Qualcomm chips have the most advantages, causing major mobile phone manufacturers to flock to the Qualcomm camp. In 2019, Qualcomm's global market share of mobile phone chips accounted for one-third, and in 2018, Qualcomm's global market share of mobile phone chips was even close to half.
2) Qualcomm’s patent authorization
From the early days of Qualcomm’s founding, it has gradually accumulated There are a large number of technologies in mobile communication patent standards from 2G to 5G today.
Among 3G and 4G core patents, Qualcomm’s patent contribution ranks first in the world. More importantly, the patents Qualcomm contributed to the 2, 3, and 4G standards are the most critical and lowest-level parts, such as CDMA in 3G and OFDM in 4G. In other words, as long as your product needs to be connected to the 234G network, there is no way around Qualcomm's technical scope.
The founder of Qualcomm, Alvin Jacobs, is A top expert in the field of communications, a former Ph.D. from MIT and co-author of "Fundamentals of Communications Engineering", he is very powerful.
The founding of Qualcomm was Jacob’s idea when he was 52 years old. In 1985, Jacob retired from Linkabit, which he founded, and was supposed to start enjoying his old age. However, experts can't stand loneliness. After taking a three-month break, Jacob and six old colleagues, all communications experts, reached an agreement and decided to continue their business.
In its early days, Qualcomm did not have established products, business models, or even sufficient funds. But they were all good at digital and wireless communications, so they decided to make a career in this field.
Qualcomm means Quality Communications, and that’s how it was established. This choice made them the overlords who would dominate the communications field in the future.
Qualcomm’s first business is satellite mobile communications solutions. In terms of technical issues, CDMA, a military communication technology used during the Cold War, was adopted. This famous technology would dominate 2G and 3G for many years.
The mainstream technology at that time was focused on TDMA (Time Division Multiple Access). However, with an in-depth understanding of communication technology, Jacob believes that CDMA, which originated from 'frequency hopping' technology, can increase network capacity by 40 times and greatly reduce network costs.
But CDMA technology was not yet mature at the time, which meant that development costs were high, took a long time, and were not comparable to TDMA. Even though the industry was generally not optimistic about it, the old man still chose Mainly focusing on CDMA technology, a lot of manpower and funds have been invested in research and development and promotion.
In 1989, CDMA conducted its first exercise. In the spring of that year, Qualcomm also reached an agreement with San Francisco Pacific Telephone Company to demonstrate CDMA technology. Late in the agreed period, Qualcomm's technical team was still doing final debugging. After they worked day and night, Alvin Jacob finally received the "thumbs up" sent by the engineer. It was this agreement that allowed them to obtain the million-dollar contract. In 1993, Qualcomm proved to the industry that CDMA could provide TCP/IP protocol services, making him an early promoter of mobile phone networks.
CDMA is a great success, it can provide better call quality and significantly reduce operating costs. As a result, operators were impressed, and in 1993, CDMA was adopted by the Telecommunications Industry Association of the United States to position itself as an industry standard. In 1995, CDMA was commercialized in Hong Kong. In 1996, it was launched in South Korea and began to spread all over the world.
CDMA has become the basic technology for Qualcomm’s growth.
After the CDMA technology was proven, in order to better promote the development of the industry, Qualcomm had already authorized CDMA technology to terminal manufacturers in the early days. By collecting patent fees from it, Qualcomm has become one of the players at the top of the industrial chain pyramid.
In 1999, the International Telecommunications Union selected CDMA as the basic technology for 3G. It has established Qualcomm’s leadership position in 3G communications in the future.
In the 3G era, WCDMA, CDMA2000 and TD-SCDMA were all developed based on CDMA technology. Because of Qualcomm’s long-term research and development in CDMA technology, it holds the right to set standards for a large number of patents. 3G The era can be said to be the era of Qualcomm.
In order to promote CDMA technology in the early days, Qualcomm also engaged in mobile phone business and communication equipment in order to embed CDMA technology in hardware. By 1999, the hardware business accounted for 60% of Qualcomm's revenue, but Jacobs made a decision to cut off the hardware business.
This is done to avoid competition with other hardware companies, which is more conducive to the promotion of its own technology. Qualcomm, on the other hand, focuses more on technology research and development, licensing and chip business.
The so-called third-rate companies make products, second-rate companies make brands, and first-rate companies make standards. Qualcomm's approach of cutting off hardware products makes it closer to a "first-class" company.
Relying on the advantages of CDMA technology, Qualcomm writes CDMA into the baseband chip and integrates the baseband function into the SOC processor. Qualcomm has grown into the world's largest processor. IC design company.
SOC includes multiple core components such as CPU, GPU, ISP, modem and so on. Qualcomm has systematic advantages in these technologies.
The baseband chip is a digital chip used for radio transmission and reception of data and is the core of communication equipment. Without a baseband chip, a mobile phone cannot make calls or use mobile data to access the Internet. Therefore, there is a baseband chip in every mobile communication device. The powerful Apple A-series chips also use Qualcomm’s baseband chip technology. Therefore, terminal equipment from major manufacturers cannot bypass Qualcomm.
In 2000, Qualcomm integrated GPS into its multimedia CDMA chips and system software, which integrated mainstream functions such as GPS, Internet, MP3, and Bluetooth. Subsequently, Qualcomm chip processing capabilities also skyrocketed, while also improving power management.
By 2007, Qualcomm became the world's leading mobile chip supplier.
Qualcomm has formed three major revenue sources based on communications patent licensing, mobile phone baseband chips, and mobile phone chip finished products.
In the past 30 years, Qualcomm has invested more than US$44 billion in research and development, and it has applied for and owned more than 130,000 patents around the world. These technologies are centered on cellular communications and include standard essential patents and non-essential patents. Standard basic patents refer to technical standards that are crucial to equipment.
Qualcomm’s patent charging model is also unique.
For general patents, the patent fee is calculated based on the portion involving the use of the patent. But Qualcomm calculates based on the total value of the entire product, that is, accessories such as screens, cameras, memory chips, etc. that have nothing to do with Qualcomm patents are also included in the calculation ratio, generally accounting for 4-5%.
For example, if a mobile phone costs US$100, Qualcomm will pay approximately US$5 in patent fees.
This is why Qualcomm is called a "rogue", but there is nothing we can do about it, because the necessary technology cannot be separated from Qualcomm.
Qualcomm’s mobile phone chip business has become the world’s number one. Most mobile phone manufacturers are competing for the first-mover quota of Qualcomm chips to gain first-mover advantage. Whoever Qualcomm supplies less may face the risk of losing market share or even going bankrupt. Qualcomm has a great say in mid-to-high-end chips.
Due to Qualcomm’s accumulation in 2G technology, it has divided the world with GSM. In the 3G era, Qualcomm, which is the dominant player and has unlimited glory, has made “Qualcomm suffer in the world for a long time.” When it came to 4G, the industry abandoned CDMA technology and chose OFDMA as the core technology of 4G. But 4G is still inseparable from Qualcomm’s years of technology accumulation.
Although it cannot completely get rid of Qualcomm’s technical control, it at least reduces Qualcomm’s voice. Among the 4G essential patents in 2014, the United States ranked first with 1,661, and mainland China ranked second with 1,247. In the 5G era, companies represented by Huawei, ZTE, and Datang Communications ranked first in terms of total number of patents. However, in the coding scheme, Qualcomm still won most of the schemes, which means that Qualcomm still has an advantage in setting standards, but in terms of implementation schemes, my country has the advantage.
In summary, due to Qualcomm’s first-mover advantage and technology accumulation in 2, 3, and 4G, Qualcomm can “collect money while lying down”, but as companies from various countries join the technology In the competition for the track, Qualcomm’s advantages in communication technology are becoming less and less obvious. On the contrary, my country's investment in 5G has finally paid off, and we will master more core technologies in the future.
In the mobile phone CPU business, Qualcomm’s position remains unshakable. Huawei and MediaTek have both produced their own 5G basebands and chips, but Huawei's chip business is in jeopardy due to sanctions. MediaTek is one of the few players that can pose a threat to Qualcomm chips. MediaTek’s Dimensity 1100 has narrowed the performance gap with Snapdragon 865 (5G) and has made great progress. However, actual usage requires more feedback from the market.
Regarding the 5G opportunity, MediaTek has not fallen behind for the time being, but whether it can seize the opportunity to continue to exert its strength and launch a counterattack like AMD depends on its subsequent performance. Diversified competition in the market also benefits consumers.