Investigating the triple logic behind Qualcomm: monopolies, competition and security

Qualcomm in China in the eventful winter, in addition to the previous high level into turmoil, the NDRC's antitrust investigation has become a temporary problem. Why did the NDRC investigate Qualcomm? The language behind this is because of the interpretation of too much, imagine more than the essence, or say, many people think too simple? No one knows, only read.

The question of Monopoly

In a way, Qualcomm was born in China because the success of Qualcomm has a stake in China for the key nodes. Since its inception, China Unicom's CDMA construction has become a key driver of high pass CDMA as one of the three major global standards, and this is the exchange of Chinese and American national interests in China's entry into the WTO. Without China being the first to build a network, the CDMA standard may only be built in small countries such as South Korea, and it is difficult to contend with the European-led WCDMA. On the basis of the success of CDMA, Qualcomm further, a large number of acquisitions and self-research WCDMA patents, TD patents, LTE patents, and accumulated a strong chip design capabilities.

Then, ZTE, Huawei and other Chinese telecom equipment manufacturers quickly rise to become the world's top five equipment companies in the first and fifth place, in Qualcomm's chip procurement accounted for nearly half. ZTE, Huawei, Cool faction, Lenovo, TCL, Millet, the Charm clan, Oppo and other mobile phone manufacturers emerged, but also become Qualcomm mobile phone chips, the main buyers, accounting for more than 30% of Qualcomm chip sales. To sum up, as of September, the 2013 financial results showed that Qualcomm's global total revenue of 24.9 billion U.S. dollars, China's market revenue of about 12.3 billion U.S. dollars, accounting for about 49%-Qualcomm and China is already a blood link. In turn, Qualcomm's market capitalisation has surpassed Intel, the world's largest chip market, to become the global market leader. Until today, Qualcomm in the mobile chip market has been ranked first, in CDMA, LTE basic patent has an insurmountable status.

So, a Qualcomm monopoly? Abuse of monopoly status? According to Strategy Analytics statistics, if according to the shipments, 2013 Q2 Global honeycomb baseband chip market, Qualcomm reached 63%, MediaTek occupies 13%, Intel occupies 7%, the fourth of the exhibition, the fifth of the Bo Tong Basic can be negligible. Such a position, close to monopoly, but can not be judged as a monopoly.

The main point of contention is whether Qualcomm has abused its monopoly position, particularly its misuse of patent rights. In the first three quarters of Qualcomm's 24.87 billion dollars in revenue, 7.55 billion U.S. dollars from technology licensing, accounting for 70% of its profits, the world unique! One of the most noteworthy points is that even if the handset makers have already bought Qualcomm's chips, they will have to pay a premium for the 2%-3%, and chip makers such as MediaTek also need to pay for Qualcomm-which is a big argument and perhaps the main focus of the antitrust effort.

The question of competition

This direct cause has long been, whether it is the development and Reform Commission to investigate the direct reason? One interpretation comes from two market rumors: the first, is the purple light has acquired RDA and the exhibition, ambition to become second only to Qualcomm, MediaTek's third largest mobile chip force, may choose to confrontation with Qualcomm, no longer subject to the "double royalties" game rules set by Qualcomm, and another rumor from LTE, China is about to release 4G licences, and there is a greater probability of LTE first, but Qualcomm High-profile announced that LTE also charge royalties. We cannot confirm the source of these two messages, but some of them are worth scrutiny.

The first speculation may not be established, the purple before the chip or capital operation of the success of the history, and the acquisition has not been completed, it should be more difficult to actively challenge now;

The second guess has some truth. In the LTE aspect, the patent right is more dispersed, independent intellectual property rights does not imply 100% autonomy. According to the ETSI (European Telecommunication Standards Institute) data, Qualcomm in the core of LTE patents accounted for about 14%-15%, Huawei, ZTE accounted for about 9%, 7%, if only the calculation of LTE, ZTE, Huawei, Datang accounted for significantly higher than the total number of LTE patent. But, most importantly, Qualcomm does not have an absolute advantage, but it can still suppress other devices, handset manufacturers, without overwhelming advantage. In particular, if Chinese enterprises want to develop in overseas markets, they must be ready to be high Qualcomm litigation at any time-Lenovo, cool, millet and other companies have very few patents, it is difficult to achieve patent swaps, more risk than ZTE, Huawei.

Logically, whether Qualcomm uses its own few patents to suppress Chinese equipment manufacturers, mobile phone manufacturers, especially the LTE also intends to charge a substantial amount of money, most likely the problem focus. If Qualcomm charges the LTE far less than CDMA and FDD LTE, it could end up agreeing mutually acceptable compromises.

If such a compromise can be reached, Chinese manufacturers will be at least LTE related equipment, mobile phone royalties would be significantly reduced, and Qualcomm can still be in the CDMA-related patents charge a large amount of royalties, the chip design capacity is still relatively strong competitiveness.

Security Questions

Political problems are unavoidable, but it is hard to read them clearly. It is inevitable and difficult to conclude that China has set up a national Security Council and a "warm war" with the US and Japan in the East China Sea.

As we all know, the U.S. IT market has the "eight King Kong", IBM, Microsoft, Google, Intel, Qualcomm, Oracle, EMC, Cisco, respectively occupy IT services, operating systems, search, PC chips, mobile chip, database, storage and telecommunications in the field of the first, And every field is an oligopoly or even a monopoly. In addition to the previous prism door, its potential security risks do exist, which is an unavoidable factor in international politics.

But it's hard to say which one to replace-unless it participates in the plans of the US government, such as the PRISM program, and there are companies in China to replace them. Therefore, in the early stage, IBM, Cisco, EMC has a relatively large impact, because, servers, routers, storage, China has manufacturers can be replaced. However, Qualcomm and Intel, there is no clear evidence, but also more difficult to replace, can only be treated with a complex mentality.

As with Qualcomm's success, it is hard to word the Silicon Valley entrepreneurial spirit, the Jewish savvy takeover, the American-style competition rules of law and patent integration, the American global hegemony that is highly integrated with politics, and the slightest luck. It is because of the Silicon Valley entrepreneurial spirit, Qualcomm can from a nameless up-and-comer to become the global king, a World War II, the emergence of CDMA military technology to the peak of the business, it is because of the family of the smart Jewish, can seize the market in the gap between the opportunity, Using the game between countries to make CDMA from the edge to mainstream; it is because of strong legal protection, Qualcomm can use acquisitions to acquire CDMA basic patents, LTE basic patents for their own use, and constantly used to suppress those who dare to offend the manufacturers, it is because of American hegemony, the United States dare to and China, Korea, Japan and other countries to open the price, through legal means to allow these countries to build CDMA networks ... It's hard for you to word it.

After all, Qualcomm as a business, itself is extremely successful, after all, in the field of chip, the United States internal enterprises are also full of brutal market war, Intel or Ti or Bo Tong, can not compete with Qualcomm on mobile chips-so, we can neither narrow, nor exaggerate Qualcomm's patent, Legal, political, etc.

Therefore, it seems inappropriate to investigate the anti-monopoly of Qualcomm, unless you have confirmation; it may be more appropriate and logical to explore the misuse of the patent charging model from its LTE patent game.