The hidden message behind Qualcomm's 2018 Summit

　　On the 25th, Qualcomm held a technology summit in Beijing, inviting almost all important Chinese partners in an extremely rare "show", including SMIC, China Mobile, Lenovo, Xiaomi, OPPO, vivo, ZTE and other big names to come on stage to help and jointly draw a blueprint for the win-win road of 5G. Let's follow the mobile phone portable editor to learn about the relevant content.

　　At this moment , Qualcomm is facing antitrust fines from the European Union and Taiwan, and is also caught in the vortex of malicious mergers and acquisitions by its competitors. However, in this cold winter, the support and support from its Chinese partners has given Qualcomm enough warmth.

　　5G China: The most dynamic and stable partner

　　After experiencing "2G following", "3G breakthrough" and "4G synchronization", China's mobile communications industry is playing a leading role in the development of 5G.

　　According to Counterpoint Research, seven of the top ten 3G/4G smartphone manufacturers in the world in 2017 were Chinese manufacturers. Among them, Xiaomi, vivo, OPPO, and Lenovo are all close partners of Qualcomm. The Chinese market has already contributed more than half of Qualcomm's revenue, and twice as much as Apple's revenue.

　　In the 5G era, China, as the fastest-growing mobile communications and semiconductor industry market, has demonstrated strong innovation and development potential.

　　A report by research firm IHS predicts that by 2035, China will rank first in the output and employment opportunities of the global 5G value chain with $984 billion and 9.5 million jobs. A recent 5G consumer survey conducted by Qualcomm showed that 60% of Chinese respondents expressed their willingness to buy 5G smartphones after they are launched.

　　The broad development prospects of China's 5G market and the willingness to develop together have made Qualcomm regard Chinese partners as "the most dynamic and stable partners."

　　Although the development of the mobile phone industry has slowed down in recent years, the shipment share of Chinese OEM manufacturers has been growing rapidly, and their business has also expanded outside China. The price of mobile phones in China's domestic market has also been gradually rising. Data shows that in 2015 and 2017, Qualcomm's revenue from Chinese OEM manufacturers was US$4 billion and US$6 billion respectively, and it is expected to reach US$8 billion in 2019, with a compound annual growth rate of 17%. China is still a gathering place for smartphone innovation and vitality, and it is also the confidence that supports Qualcomm's future development.

　　The high speed and low latency of 5G networks will bring a new experience to smartphone users, including redefining social networks, better presence, and greater authenticity and reliability. At the same time, 5G can be extended to a wider range of fields such as automobiles and the Internet of Things, giving rise to new business models. In Qualcomm's view, 5G is not a simple communication connection technology, but a unified connection platform that will empower various industries, all of which will become new growth points.

　　It is for this reason that Qualcomm has joined hands with important Chinese partners to launch the "5G Pilot Program" to accelerate the development of 5G in China and better support the development of other industries, including China's smartphone industry.

　　"China's leadership in LTE/5G technology and manufacturers' strong product portfolio covering all levels provide strong support for the launch of global terminals," said Cristiano Amon, president of Qualcomm.

　　At the end of last year, Qualcomm released the world's first 5G new air interface multi-mode modem Snapdragon X50 and 5G new air interface smartphone reference design. In addition, Qualcomm is accelerating the global deployment of Gigabit LTE, covering 25 countries and regions, launching 17 terminal devices, and reaching cooperation with 43 operators.

　　According to the plan, Qualcomm will make 5G a reality in 2019. It is expected to launch commercial terminals that meet the 5G New Radio (NR) standard and commercial top-level 5G terminals as early as 2019.

　　"The mobile ecosystem is the most competitive sector in today's market. Qualcomm has no shortage of competitors in its development. From the current perspective, at least three or four other companies will announce 5G-related products in the future. Qualcomm must move faster to seize the first-mover advantage in 5G," said Amon.

　　RF Front End: A Story of Commitment and Support

　　At the summit, Qualcomm signed a multi-year purchase order for RF front-end solutions with four mobile phone manufacturers, including Xiaomi, vivo, OPPO, and Lenovo. In the next three years (2019-2021), the four mobile phone manufacturers will purchase RF front-end components with a total value of no less than US$2 billion.

　　Chinese manufacturers' active support for Qualcomm will also help Qualcomm's RF front-end business achieve better development by taking advantage of the window of 5G development in the next three years.

　　In the 4G era, as the frequency bands supported by smartphones continue to increase, the importance of RF front-end technology has become more prominent. On the PCB board of smartphones, the proportion of RF front-end is increasing and the complexity is getting higher and higher. Today, a 4G full network mobile phone contains dozens of RF chips, and in the future 5G era, the number of RF chips will reach more than a hundred.

　　Data released by Qualcomm shows that the serviceable market business size will reach US$150 billion in 2020, and the RF front-end will reach US$20 billion, second only to the core smartphone business. The RF front-end will be a key growth area for the mobile industry in the future.

　　The wide range of RF front-end platform products includes gallium arsenide (GaAs) power amplifiers (PA), envelope trackers, multi-mode power amplifiers and modules, RF switches, independent and integrated filter modules, and antenna tuners covering cellular and other connection technologies. Among them, power amplifiers, filters and antennas are the main technologies of RF front-end.

　　In recent years, Qualcomm has continuously strengthened its RF technology. In 2014, it acquired Blacksand to enter the PA market. In 2016, it established a joint venture with Japanese electronic component manufacturer TDK to enter the filter market, and began to lay out RF front-end technology for the 5G era in advance. In February 2017, Qualcomm launched a new RF front-end solution RF360, which provides a complete solution from "modem to antenna".

　　According to Qualcomm, the advantage of Qualcomm's RF front-end technology is that among the important component technologies, Qualcomm has a comprehensive series of filters and filtering technologies including surface acoustic wave (SAW), temperature compensated surface acoustic wave (TC-SAW) and bulk acoustic wave (BAW). In addition, it also has SOI technology for switch products or antenna tuning, as well as low noise amplifier (LNA) technology. In other words, Qualcomm can provide the complete technology required for the RF front-end. Secondly, through cooperation with TDK, Qualcomm has advanced module integration capabilities and can provide highly integrated solutions, and high integration is also the future development trend of RF front-end.

　　In addition, Qualcomm has its own modem, which is its core differentiation advantage compared to third-party RF component manufacturers. Moreover, Qualcomm's years of accumulation of advantages in modems also allow it to provide a systematic solution from antenna to RF front end to modem. Many third parties only have a simple RF component that can only work independently and realize some hardware functions.

　　In addition to these advantages, Qualcomm also has some independent technological innovations in the RF front-end, including TruSignal antenna enhancement technology and tracking technology that support carrier aggregation. Currently, the Snapdragon 835/660/630 mobile platforms have introduced RF front-end technology.

　　A domestic RF industry insider told Jiwei.com reporter that as a new entrant into the RF field in recent years, Qualcomm has relatively low customer acceptance and its products are difficult to mass-produce at first-tier manufacturers. In the early stages, it was unable to compete with giants such as Skyworks and Qorvo, but 5G and Chinese partners have brought opportunities to Qualcomm.

　　"Now it is equivalent to opening a door, allowing Qualcomm to use the 5G platform to gain first-mover advantage and enter the first-tier market. At the same time, Qualcomm's module integration solutions will also help OEM manufacturers launch terminal products faster." The person said.

　　Xiaomi, vivo, and OPPO have all stated that one-third of their products will use Qualcomm's RF front-end in the future, which is equivalent to providing a guarantee for the initial market volume of Qualcomm's RF front-end technology. In addition, the three companies also signed an agreement with Qualcomm in November last year to purchase components worth US$12 billion in the next few years.

　　"Xiaomi, OPPO, and vivo took their first steps with the support of Qualcomm, and these companies also provided us with great help when our innovative technologies in RF front-end were brought to market. This is a story about innovation, commitment and mutual support," Amon told Jiwei.com reporters.

　　However, it should be pointed out that Qualcomm's modular integration of RF front-ends may, to some extent, weaken the freedom of OEMs to customize in specific markets. At the same time, according to Taiwanese media, Qualcomm has entered the supply chain by subsidizing manufacturers. This packaging method will also bring considerable pressure to PA and filter manufacturers, especially domestic manufacturers.

　　Business model: from sticking to expanding

　　In recent times, Broadcom has been knocking on the "acquisition door", and Qualcomm is not happy about it.

　　Many people pointed out that the voice Qualcomm displayed and gained at this China summit sent more hidden messages to investors and Broadcom .

　　At the summit, partners including Lenovo, ZTE, vivo, OPPO, and Wingtech Technology all actively affirmed Qualcomm's focus and passion in the professional field of communications, and clearly expressed their concerns about the uncertainties that may be caused by the acquisition by Broadcom in the future.

　　OPPO CEO Chen Mingyong even pointed out that Broadcom's acquisition was a short-sighted behavior that only focused on capital operations and was not conducive to the healthy development of the industry. OPPO also expressed concerns that after the acquisition, Broadcom might increase chip prices and significantly cut Qualcomm's R&D expenses.

　　Cheng Lixin, general manager of ZTE's terminal business unit, even used the example of the US operator T-Mobile facing acquisitions several times, which actually stimulated its innovation vitality, and gave Qualcomm a thumbs up for its example of becoming more courageous after setbacks.

　　With the March shareholders' meeting approaching, Broadcom's acquisition of Qualcomm will be voted on by Qualcomm shareholders. At the end of last year, Broadcom sent a notice to Qualcomm to nominate 11 new directors. At such a critical time, in the most important Chinese market in the future, so many important customers have made clear statements, which is equivalent to conveying a message to Broadcom that customers want to maintain the status quo and operate independently, and at the same time gives confidence to investors.

　　Analysts pointed out that Broadcom's acquisition of a company of Qualcomm's size will definitely involve antitrust review, and the attitude of Chinese companies may have an impact on the government's approval process. It is particularly important for Chinese companies to speak out at this time.

　　The patent licensing model has made Qualcomm successful, but it has also made it more vulnerable to attacks, including nearly $1 billion in settlement costs in China and South Korea in the past three years, and a series of lawsuits with Apple. Recently, the European Union and Taiwan have successively issued huge antitrust fines to Qualcomm.

　　From the perspective of smartphones, patent licensing will still be Qualcomm's main source of revenue, but as Huawei, Apple, Samsung and others are all developing independent chips and the market competition is fierce, Qualcomm needs to explore new areas to continue to maintain the healthy development of the company. This is also the reason why Qualcomm has continued to expand into the Internet of Things, automobiles, and mobile computing in recent years.

　　This direction is undoubtedly correct, and the capital market also needs such a "story", but at present, Qualcomm may still continue its patent licensing business model, but this will face increasing challenges in the future.

　　Qualcomm has also been emphasizing the "invention-sharing-collaboration" business model. In Amon's view, the licensing business model in the smartphone field will inevitably face changes in the new era, especially when connectivity capabilities extend to more different industries.

　　"Qualcomm's business model must actively adapt during the development process. On the one hand, it must support the development of a wider range of industries and ensure the application of technology. On the other hand, in terms of mobile communications, it must extend outward from its original focus to better connect with other industries," said Amon.

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