Qualcomm swallowed more than 6 billion tickets to a domestic patent war or fight

The Qualcomm antitrust case finally settled.

The National Development and Reform Commission yesterday to the Qualcomm abuse of market dominance, the implementation of exclusion, restrictions on competition monopoly, after 14 months of investigation, according to the law to make 60 8.8 billion yuan fine decision, and ordered Qualcomm immediately stop the illegal and immediate effect. The penalty has also become the biggest antitrust penalty in China so far.

With the rectification, the first Qualcomm to give the domestic lack of patent phone manufacturers of the umbrella will disappear, in the future, these manufacturers are likely to face the patent lawsuits initiated by other manufacturers. Chip industry personage Clock (a pseudonym) told the south all reporters, last December, ZTE, Huawei has issued a letter of attorney to other terminal manufacturers. "The cancellation of the anti-authorization protection will be the prelude to a domestic patent war. ”

Qualcomm to raise revenue forecasts

U.S. time February 9, Qualcomm in the United States headquarters in San Diego announced the development and Reform Commission on antitrust investigations reached a solution. The NDRC has issued a decision on administrative penalty, which finds that Qualcomm violates the anti-monopoly law and that Qualcomm does not seek further defences. "In spite of regret, I am glad the NDRC has approved a Qualcomm rectification program." ”

In this survey, the most notable addition to the 60-8.8 billion-dollar ticket, but also the change in the pattern of royalties, mainly the basis of royalties and the protection of the anti-authorization has a greater degree of adjustment. "We can see that Qualcomm has been quick to send out a survey in the relevant departments, such as the NDRC, which shows that it is urgent to close the investigation." Clock told reporters that over the past year, mobile phone manufacturers to "wait for the results of the investigation as a result of" deferred royalties on this business has a greater impact. "The announcement of the proposed rectification of the new provisions can be implemented after January 1, but the current handset manufacturers have not received the official rectification program, the specific patent fee payment situation needs to be negotiated." ”

"We are delighted that this investigation has ended and that the past year has brought a lot of uncertainty to our business in China," Qualcomm's president, Aboli, told a group of Chinese journalists yesterday. Because of the reduction in uncertainty, Qualcomm yesterday adjusted its 2015 revenue forecast from $26 billion to $28 billion to $26.3 billion to $28 billion. After the announcement, Qualcomm opened the contrarian trend rose 3%, reached nearly 5-day high, closing price rose 1.5%.

Consultation to provide a list of patents

In the first of the rectification scheme, Qualcomm proposes that the license for its existing 3G and 4G necessary Chinese patents be separated from those of Qualcomm's other patents, and that Qualcomm will provide a list of patents during the negotiation process. In Clock's view, this at least allows handset makers to know what to buy: "The past Qualcomm model was a packaged patent portfolio sale." This is equivalent to giving you a basket of fruit and then not letting you know what fruit it is. "Qualcomm Senior PR manager Qi also told the south reporters, Qualcomm's patent portfolio sales are one-off, there is no multiple charges."

"In the past, our offer for all licensees was based on the license of our overall patent portfolio," he said. Now, under the rectification plan, Qualcomm's existing 3G and 4G licenses for the necessary Chinese patents will be separate from those of Qualcomm's other patents. "China's licensee now has a choice, under the new scheme, to obtain only the necessary Chinese patents, other rights to negotiate separately, or to buy a patent portfolio in accordance with the original scheme," Qualcomm President Aboli explained. ”

Hong Bai, a mobile phone manufacturer, told reporters that the definition of "necessary" patents could be the key to this provision. "The necessary patents are charged at 5% and 3.5% per cent, while other patent charges are not reflected in the rectification plan." Hong Bai said that if the "separate consultation" in the negotiations, Qualcomm's strong position will allow small and medium-sized mobile phone manufacturers do not have too much bargaining space, as well as direct purchase of patent portfolio.

Change of patent fee pattern

The change of patent fee model is also mentioned in the rectification plan: "For the license of the necessary Chinese patents for Qualcomm 3G and 4G of branded equipment sold in China, Qualcomm will charge a 5% license fee for 3G equipment (including 3g/4g), and for 4G devices including 3 model LT E-t D D, if no C D M A or WC D A will charge a 3.5% license fee, in each case the base of the license fee is 65% of the net price of the equipment. ”

"According to other chip manufacturers, mobile phone manufacturers need to pay chip manufacturers about 5% of the cost of the patent fee, but Qualcomm is based on the total cost of the machine charge 5%." For example, the whole machine 3000 yuan, Qualcomm charge a patent fee of 150 yuan, and its chip price is only about 200 yuan. Zhongbai said, in the functional machine era, the machine price of about 1000 yuan, the difference is not obvious, but into the era of the smart machine, for many mobile phone manufacturers are overwhelmed.

Although the patent fee downward, but still did not reach the chip price. Qi told the south reporters, Qualcomm's patent is more complex, can not be simple to chip prices as a base. "In addition to the traditional chip patents, we also include RF, connection and other aspects of the patent grant." ”

But even so, Qualcomm's revenues are still significantly affected. According to the latest results of Qualcomm 2015Q 1, the patent fee income of 1.816 billion U.S. dollars, Zhongbai told the South reporters, of which 70% from China, and do not look at the 4G rate of decline, the base of the charge fell 35% of the charge base is less than 440 million U.S. dollars of income. More importantly, its royalties contribute a net profit of 78% per cent of the total revenue of 25%.

"If you change the charging model for Qualcomm royalties, it could lead to a rise in chip prices," he said. Clock revealed that this year, Qualcomm in the 4G chip price war has been lower than the normal margin level, the price is lower than M T K 10% or so, is because of the monopoly of high patent fees to supplement.

But it commentators Sun Yongjie that it is understandable that Qualcomm could make up for the loss of royalties by increasing the price of chips. "At present, 4G Chip patented technology 80% in the hands of Qualcomm, its products in the high-end market has a strong irreplaceable, improve the price of chips also have no way." ”

Anti-authorization protection can be negotiated separately

Anti-authorization protection is at the heart of Qualcomm's business logic, Hong Bai, a handset-industry insider. "In the past, every mobile phone manufacturer that joined the Qualcomm Camp had to grant its patents to Qualcomm unconditionally, and small and medium-sized manufacturers who entered the high-pass camp would be able to get a Qualcomm's anti-licensing protection against patent charges or lawsuits from other handset makers." Hong Bai said that this allows many small and medium-sized manufacturers under the high pass protection, no need for technical research and development, focus on marketing can open up their own market.

"In the short term, such protection will help manufacturers to open up the market, but without patents can not access the high-end market overseas, this is its unavoidable problem." "Hong Bailu is the expression. The recent patent lawsuits in India between Millet and Ericsson have been largely rooted in the lack of patents. "Patents will be the core competitiveness of mobile phones in the future, but many domestic manufacturers are design patents, not the core invention patents." In the short term, some Internet handsets will still accept a "reverse license" for Qualcomm. ”

But it is different for vendors with larger patent pools. According to clock, ZTE and Huawei have issued legal letters to other terminal manufacturers last December, "the cancellation of the anti-authorization protection will be the prelude to a domestic patent war." ”

Huawei Consumer Terminal CEO Yu has publicly said that many domestic peers in addition to the Qualcomm to pay royalties, not to any patent holders to pay royalties. To Qualcomm authorization, also borrow Qualcomm's patent "umbrella", once the cancellation of the anti-authorization agreement, the loss of "Umbrella", many of the domestic lack of patented technology handset manufacturers will face 10% of the cost of upgrading. South All reporters check the Chinese Knowledge Culture Bureau website, input millet, oppo respectively to retrieve 1486 and 2,414 patents, and ZTE, Huawei, respectively, 50,000 and more than 60,000 patents.