Soomal Insights 2018: Phone

Mobile phone industry chain, Apple and Qualcomm dispute

Perhaps because of the experience of the country's industrialization, the Chinese are particularly concerned about "independence". So, in the market of 400 million a year, what is the autonomy rate of domestic mobile phones? But in fact, in the era of globalization, it is still unrealistic to want a 100% autonomy mobile phone from head to toe. The processor and baseband of the mobile phone are from Qualcomm, the antenna comes from Skyworks, the storage memory comes from Toshiba, Hynix, etc., the display screen comes from LG, Samsung, JDI, the camera sensor is from Sony, Samsung, the cover glass comes from Corning. But these originals can't work alone. For example, if an image sensor alone without lens, ISP and other components, it is impossible to take pictures and videos; the screen panel also needs to cut and install circuits, etc. These packaging manufacturers are also from domestic enterprises, such as Sunny, O.Film, Truly, etc. Of course, they also have another name that is familiar to investors: Apple concept stocks.

The events of ZTE and Huawei are still awakening to domestic enterprises, either not in the first place or in full autonomy. The "domestic CPU" has overshadowed the green screen event of Huawei Mate 20 Pro. In all fairness, Huawei's localization rate is indeed the highest in the domestic high-end mobile phones. The key ICs such as processor, baseband, power supply and audio are designed independently. The foundry comes from TSMC, the display panel comes from BOE, and there are companies such as Goodix, Goertek offer a wide range of components and technologies. However, Huawei's toss in the mobile phone market makes it easy for consumers to forget that Huawei's main business is actually a communication equipment business.

On January 24, Huawei released its first batch of 5G base stations and baseband chips. The base station chip was named TianGang. At present, Huawei has obtained 5G commercial contracts in more than 30 countries and regions, and 25,000 5G base stations are sold to all over the world. Huawei's blade base station design won the first prize of the National Science and Technology Progress Award in 2018. Its base station has lower power consumption, also has a modular design that makes the installation and deployment of 5G base stations more convenient and faster than the 4G era. The 5G baseband chip Balong5000 adopts the most advanced TSMC 7nm process, which is not only advanced in technology but also superior to Qualcomm's single 5G plug-in baseband X50, and supports 2G-4G mobile network. Relatively speaking, Qualcomm has a lot to worry about. A week ago, there were people discussing why the 700 billion market value of Apple did not directly purchase Qualcomm with a market value of 70 billion US dollars. However, the current market value of Qualcomm is less than 60 billion US dollars. The market value is not the first thing. At present, in the Android mobile phone camp, Qualcomm's processor and baseband occupy an absolute dominant position. Although from 2017 statistics, Qualcomm's baseband chip market share is only 53%, MediaTek has 16%, Samsung, Spreadtrum/Intel are both 12%, but Qualcomm processors are concentrated on medium and high-priced phones. Qualcomm ranks third in the number of 5G standard essential patents (SEPs) for communications companies. Qualcomm ranks third with 10%, lower than Huawei's 17% and Nokia's 13%, and even less as good as Samsung and LG's 11%. Qualcomm has gradually failed to keep up with its competitors. But even if Qualcomm has no advantage in the 5G patent, the benefits brought by the patent stocks in the 3G and 4G eras and the urgency of the 5G commercial arrow are enough to drive Qualcomm to wield a patent stick against Apple. Apple is the most profitable company in the wireless communications industry for Qualcomm, the most profitable company in the mobile phone industry, and has launched global lawsuits in Germany and China. The US Federal Trade Commission [FTC] began an anti-monopoly investigation of Qualcomm's business practices in 10 years from 2017 and filed a lawsuit. However, because of the particularity of the 5G industry, whether Qualcomm should fight for reconciliation, whether the US government will intervene in the judiciary? No matter what ruling the FTC makes, it is a good opportunity to the masses and manufacturers to watch the show.

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