The hottest Qualcomm market value evaporated $13bi

2022-10-01
  • Detail

Qualcomm's market value evaporated $13billion, worried about the settlement of the industrial chain after autumn

as the anti-monopoly investigation of the national development and Reform Commission continues to be carried out, Qualcomm's share price is under pressure

Stacy Rasgon, an analyst at Sanford C Bernstein, a well-known U.S. investment management company, recently released a report that lowered Qualcomm's rating and lowered its target price by $5 to $80

stacy Rasgon has maintained Qualcomm's buy rating since 2009. In fact, standing at the top of the global wave of mobile Internet, Qualcomm, which claims to be born mobile, is a true favorite of Wall Street, and its market capitalization surpassed Intel for the first time at the end of 2012. At that time, Qualcomm's revenue was less than 40% of Intel's

licensing issues from China are gathering more and more clouds, and there is reason to question the long-term development of Qualcomm's licensing business. Stacy Rasgon said

since Derek aberle, President of Qualcomm, admitted at the financial report analysis meeting on July 24 that the investigation of the national development and Reform Commission would affect the company's performance, its share price has fallen from $81.6 to $73.72 (closing price on July 31), a decline of more than 10%, and the market value has evaporated by about $13.2 billion

however, many domestic industry chain manufacturers were cautious in responding to the interview and consultation of 21st Century Business Herald, fearing that Qualcomm would settle accounts in the autumn

huge profits brought by patent strategy

chip enterprises such as MediaTek, Spreadtrum and Datang Lianxin have not been authorized by Qualcomm. On August 1, Wang Yanhui, Secretary General of the China Alliance, told 21st Century Business Herald that refusing to license patents to other chip manufacturers is a key part of Qualcomm's patent strategy. Only in this way can Qualcomm maintain its charge per machine model

Qualcomm's approach is not to authorize chip manufacturers, but to charge patent fees from their customers. Its patent licensing fee includes two parts: first, a fixed license fee, usually US $500000 per manufacturer; Second, floating royalties, that is, a certain proportion of the patent fee is charged to the manufacturer according to the ex factory price. In China, the patent collection ratio of WCDMA and CDMA is 5%, and that of LTE is 4%

if the chip manufacturer is authorized, it will not be able to continue to charge its customers twice, and it will not be able to maintain its existing charging mode based on the wholesale price of the whole machine

MediaTek signed an agreement with Qualcomm in 2009 to get a stepping stone to enter the 3G market, but according to people familiar with the matter, Qualcomm did not grant patent authorization to MediaTek in this agreement. Even if we could not obtain the actual strength and simulated toughness in the imitation, MediaTek customers still need to obtain separate authorization from Qualcomm, and MediaTek must report its customer list and purchase quantity to Qualcomm. In 2013, MediaTek and Qualcomm amended the agreement and no longer need to report the purchase quantity of customers to Qualcomm

Wang Yanhui believes that Qualcomm's patent licensing strategy is closely linked and does not license to other chip enterprises, so that Qualcomm can use the whole machine as the basis for patent fees. By importing the original exchange digital controller to control the servo electromechanical with the synchronous belt to make a pair of high-precision ball screw mobile test-bed to bundle the patent license with the chip sales, Qualcomm can obtain much higher excess profits than the chip

Qualcomm's fy2013 annual report shows that its patent licensing business accounted for 30% of revenue, contributing up to 87% of Qualcomm's pre tax profit

investigated all over the world

in fact, Qualcomm's ingenious and interlocking patent licensing model has long been questioned all over the world and has been frequently investigated by fair trade institutions in Japan, South Korea, the European Union and other places, while making huge profits for it

in 2006, the Japan Fair Trade Commission launched an investigation against Qualcomm. At that time, Japanese companies such as Panasonic, NEC and Mitsubishi complained that Qualcomm abused its technology monopoly position in cooperation. After more than three years of investigation, the Japan Fair Trade Commission determined in June 2009 that some provisions of the cooperation agreement signed by Qualcomm with the above-mentioned manufacturers violated Japan's anti-monopoly law

the Japan Fair Trade Commission said that when Qualcomm authorized patents to Japanese enterprises, it forced the latter to accept the following three terms: first, the relevant patents of Japanese companies should be licensed to Qualcomm free of charge; Second, Japanese companies cannot sue Qualcomm and its customers with their own patents; Third, Japanese companies cannot sue Qualcomm for patent authorization with their own patents

under this agreement, Japanese companies can neither Sue nor collect patent fees, and lose the enthusiasm for technology research and development, so that Qualcomm can continue to maintain its market leading position. The Japan Fair Trade Commission said at the time

the Korean Fair Trade Commission (kftc) also launched an antitrust investigation against Qualcomm in 2006. At that time, after receiving complaints from Texas Instruments, Broadcom and two other chip companies, kftc investigated Qualcomm's local offices and three customers

kftc made a ruling in July 2009, fined Qualcomm $208million, and required it to correct a number of previous violations

in the three-year survey, kftc found that Qualcomm has controlled more than 98% of the CDMA baseband chip market in South Korea since 2002. Although via in Taiwan, China and ionex in South Korea tried to sell chips to Samsung, LG Electronics and other manufacturers in 2004 and 2005, the market share is very small

the reason is that first of all, Qualcomm has adopted a discriminatory patent fee rate, charging 5% of the patent fee to manufacturers using Qualcomm chips. If manufacturers use 1. Shorten the experimental time with chips from other suppliers, Qualcomm will charge 5.75% of the patent fee. Secondly, Qualcomm also treats manufacturers differently in terms of discounts. For example, only when an end-user enterprise hands over 85% of its purchase orders to Qualcomm will Qualcomm give the other party a discount of 3%. In this way, manufacturers have no incentive to use other chip suppliers. Third, Qualcomm still charges 50% of the original standard for expired and invalid patents

Qualcomm's discriminatory charging and discount policies make it difficult for other chip manufacturers to gain a foothold in the Korean baseband chip market, so they can maintain a super high market share for up to 10 years. Kftc finally required Qualcomm to correct the above three violations while paying fines

the EU investigated Qualcomm earlier. As early as October 2005, the EU received allegations from Nokia, Ericsson, Broadcom, NEC, Texas Instruments and Panasonic that Qualcomm's unfair competition harmed the mobile communication market in Europe and other regions, resulting in higher prices and fewer choices for operators and consumers

however, Qualcomm has adopted a strategy of breaking each other in Europe. By November 2009, the European Commission had ended its four-year antitrust investigation into Qualcomm without imposing a fine or reaching a final conclusion. The reason is that these six companies have withdrawn their complaints

in the U.S. domestic market, Qualcomm and Broadcom have been competing in court since 2005. Finally, Qualcomm settled their global patent disputes by paying Broadcom $891million in cash over four years, and promised not to sue each other

the industrial chain is silent and worried

the specific amount of fines is hard to say. Wang Yanhui believes that if the national development and Reform Commission finally determines Qualcomm's monopoly, Qualcomm may not only face fines, but also be required to correct previous violations

for China's industrial chain, it will be a great benefit if Qualcomm's practices suspected of abusing its monopoly position are corrected

some insiders say, for example, Huawei owns many patents, but according to the current patent licensing model with Qualcomm, Huawei cannot charge Qualcomm through its own patents, which may significantly reduce patent expenditure and even obtain positive patent revenue in the future

however, in the face of the favorable investigation of Qualcomm by the national development and Reform Commission, many industry chain enterprises were reluctant to say more in the face of interviews

Qualcomm is the largest chip supplier in the market, and we still need to do business. An insider of a Shenzhen enterprise said that the company was very cautious about Qualcomm's case. First, it was worried about affecting the current chip supply, and second, it was afraid that Qualcomm would settle accounts in the future

original title: Qualcomm's market value has evaporated $13billion, and the industrial chain is worried about settling accounts after autumn

Copyright © 2011 JIN SHI