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And expensive: Apple finally can't stand Qualcomm laughed last

via:新浪科技     time:2019/4/17 13:32:45     readed:160

Qualcomm won a full victory

To put it simply, the outcome of the lawsuit is that Apple agreed to pay Qualcomm a patent license fee and continue to purchase baseband chips from Qualcomm. In other words, Apple finally couldn't stand it, and Qualcomm still laughed at the end. After all, although the two companies are giants, Apple's market value is far more than Qualcomm, but in a completely different situation: Apple has nothing to counter Qualcomm, Intel baseband and Qualcomm have a clear gap, 5G chips are subject to people; Qualcomm has patents And the base card chip two big cards, directly stuck to the key of the apple -iPhone.

There is no doubt that this is a comprehensive victory for Qualcomm. Because this kind of settlement, it was originally the desired outcome of Qualcomm, and it was the situation before Apple initiated the lawsuit two years ago. After two years of fighting, Apple did not take any advantage, or accepted the original relationship with Qualcomm and continued to purchase baseband chips from Qualcomm.

Because of this, the impact of the settlement on the share prices of the two companies is also very different. After the news was released, Qualcomm's stock price soared by more than 20%, the biggest one-day gain in 20 years, and the market value soared more than 16 billion US dollars. The stock price of Apple has almost no fluctuations, and it has fallen by 0.1% after the market. Because this also means that Apple's efforts to challenge Qualcomm's industry rules have been completely defeated.

Another related news is that Intel announced that it will give up the 5G baseband chip business that is in the bottleneck. In the case that Apple has reached a settlement with Qualcomm and continues to purchase Qualcomm chips in the future, Intel has lost its significance in continuing to invest in 5G baseband chips. And Intel's card in the development of 5G baseband chips is the key reason for forcing Apple to soften Qualcomm.

Century lawsuits inciting the industry

It is no exaggeration to say that Apple and Qualcomm’s lawsuit can be called intelligence.Mobile phoneThe industry's century lawsuits have far more influence than Apple's eight years ago. Apple and Samsung's patent litigation surrounding the "rounded rectangle" is just a share of the dispute between the two major smartphone makers, while Apple and Qualcomm's patent licensing lawsuits affect the entire smartphone industry.

With the smartphone business, Apple has become the world's highest-value technology company, and has also achieved the highest profit in the smartphone industry. Qualcomm is the founder of the wireless communications industry, directly drafting industry technical rules in the 3G and 4G era. In addition, Qualcomm's Opteron chips and baseband chips have been the engine of the Android camp for many years (except for Huawei in recent years).

The patent licensing model that challenges the price of the whole machine is Apple's core complaint against Qualcomm. Explain that the whole machine charge is based on a certain percentage of the price of each mobile phone, and not a fixed fee per mobile phone. However, whether smartphones choose different wireless communication standards, whether to use Qualcomm standard essential patents and non-standard essential patents, will affect the charging ratio standard, generally ranging from 2.275% to 5%. For smartphones that sell for more than $400, the patent charge will be lower. In the 5G era, Qualcomm has lowered the proportion of fees.

Qualcomm has been criticized for this kind of charging model. However, this is not a Qualcomm initiative, nor is it a unique model of Qualcomm, but the mobile communication industry has been using the inherent order for decades. Motorola and Nokia, the former mobile communications overlord, also charged patent fees according to this standard. The reason for this charging model was also very simple. Encourage the communications giant to invest funds and resources in research and development to promote the development of the entire mobile communications industry, and therefore hope to share the return of industry development.

Qualcomm is the company with the most patents in the 3G and 4G eras, which is directly related to Qualcomm's investment in research and development. Since its inception, Qualcomm has invested more than $50 billion in wireless communication technology research and development. Since 2006, Qualcomm's R&D investment has accounted for more than 20% of revenue, and it is also the highest among technology giants.

It is worth mentioning that the National Development and Reform Commission of China issued a fine of 975 million US dollars to Qualcomm in 2015, and also adjusted the highest proportion of the whole machine to 3.25%. However, this penalty is in fact equal to Qualcomm's overall price charging model. After Meizu and Qualcomm reached a patent litigation settlement, all Chinese mainstream smartphone manufacturers accepted and recognized Qualcomm's patent licensing model.

Apple litigation high-pass reason

Looking back at the ins and outs of this lawsuit between Apple and Qualcomm. Apple has been using Qualcomm's baseband chips since 2011, and Qualcomm has given Apple a certain return offer on patent licensing fees. However, due to Apple's active promotion of the US Federal Trade Commission's anti-monopoly investigation of Qualcomm, Qualcomm believes that this has undermined the cooperation agreement between the two parties, so at the end of 2016 decided not to return some patent fees to Apple. One billion dollars, this is the direct trigger for Apple to launch a lawsuit against Qualcomm.

In January 2017, Apple officially sued Qualcomm in the United States, demanding that Qualcomm pay the cost of up to $1 billion and publicly challenge Qualcomm's patent licensing fees, saying that Qualcomm abused its market dominance. In fact, according to the court records, before this, Apple has reduced the patent license fee paid by each iPhone to Qualcomm to 7.5 US dollars, and paid about 2 billion US dollars per year to Qualcomm.

Since April 2017, Apple has decided not to pay Qualcomm a patent license fee before the end of the lawsuit. So far, it has been in arrears for two years. Since Qualcomm's patent licensing department has up to 12% of its revenue from Apple, Apple's refusal to pay directly affects Qualcomm's financial performance, which also caused Qualcomm's share price to have fallen by more than 20%.

In order to counter and pressure Apple, Qualcomm also filed a lawsuit against Apple in the United States, and subsequently filed a lawsuit against Apple in major markets such as China and Germany. In the past two years, Qualcomm and Apple have filed more than 50 lawsuits in six countries around the world, a century-long lawsuit in the smartphone industry.

The key node appeared in December last year, the Chinese and German courts have supported Qualcomm's appeal and decided to ban the sale of Apple's iPhone. This caused a heavy blow to Apple, which also caused Apple's share price to fall to a low of $150 in the past year in December. In contrast, Apple's stock price was still at an all-time high of $232 last October. Of course, the decline in sales of the three iPhones released last year was the key reason for the stock price crash. However, Apple filed a reconsideration application in China, trying to bypass the two human-computer interaction patents involved in Qualcomm litigation through software upgrades, and only sells iPhones using Qualcomm baseband chips in Germany.

Different litigation status

Even at this time, Apple is still determined to contend with Qualcomm "blood war in the end", saying that the ban on sales is "a further desperate move of Qualcomm ... will seek all legal channels through the court." However, Apple also had to Admitted, "Partially banned iPhone will force it to reach a settlement with Qualcomm on patent disputes." Qualcomm CEO Morenkov is optimistic that the victory of the patent lawsuit will help persuade Apple to agree to resolve the dispute between the two sides.

However, in this series of patent litigations, the status of Qualcomm and Apple is completely different. What Apple can do is simply refuse to pay and hit Qualcomm's revenue and performance, while Qualcomm can rely on Apple's infringement of its patents to directly hit Apple's core iPhone business through a continuous lock-up order. In fact, both China, the United States, and German courts have recognized that Apple products do infringe Qualcomm's patented technology.

The most interesting thing about this century-long lawsuit is that Qualcomm, which has a clear upper hand, has frequently waved the olive branch and released the signal of reconciliation many times. The apple that is obviously in a disadvantageous situation is a situation of uncompromising, and has repeatedly expressed its willingness to fight to the end. . After all, the two sides have completely different core demands: Qualcomm wants only Apple to continue to pay patent licensing fees, while Apple wants to subvert Qualcomm's patent licensing model.

In the fiscal year 2016 before the patent litigation (FY17 and FY18 results were affected by Apple’s refusal to pay royalties), QTL, the technology licensing arm, had revenues of $7.6 billion, accounting for only one-third of Qualcomm’s total revenue. . Affected by patent litigation, QTL business revenue in the fiscal year 2017 accounted for a quarter of Qualcomm's total revenue.

However, Apple has more serious iPhone dependence. Although it has continued to diversify its business in recent years, Apple still has nearly 60% of its revenue from the iPhone. In the fourth quarter of last year, Apple's revenue fell by 5%, the core factor is that iPhone revenue fell by 15%. This unfavorable situation directly suppressed the fighting spirit between Apple and Qualcomm. In other words, if the two sides are really bloody, Apple will suffer far more losses than Qualcomm. For Apple, this battle is to kill five hundred and kill one thousand.

However, technology licensing revenue is directly related to Qualcomm's R&D investment. Up to 80% of QTL's revenue is pre-tax profit, which brings Qualcomm two-thirds of its profits. A considerable part of these profits will continue to be invested in the front-end basic research and development by Qualcomm and then authorized for use by the industry. Apple refused to pay Qualcomm a multi-billion dollar license fee each year. There are also considerations for Qualcomm's R&D investment. Qualcomm's R&D in 5G, Nine Dragons chips and baseband chips is almost directly related to the competitiveness of the Android camp.

Baseband eventually crushed apple

Since the beginning of this lawsuit, Qualcomm CEO Morenkov has repeatedly stated that the lawsuits of the two companies will end in a settlement. And Apple has repeatedly insisted that it wants to break Qualcomm's "unreasonable charging model." Just the day before the settlement was reached, the two sides also fought a fierce battle in the federal court in San Diego. Apple has offered Qualcomm a return of up to $9 billion in patent licensing fees (if Qualcomm is recognized, Qualcomm will need to pay $27 billion), while Qualcomm seeks to pay Apple a maximum of $15 billion in patent arrears.

What made Apple finally choose to admit defeat? It is of course impossible for the two sides to reach an agreement within one day, and perhaps a long-term settlement negotiations have been carried out for several months. In November last year, Morenkov was also optimistic that he believed the two companies were close to reaching a settlement. However, Cook, who did not appreciate it, publicly rebutted that Apple had not negotiated settlement at all. Looking back, the two companies apparently reached a part of the consensus.

Perhaps the baseband chip became the last straw to overwhelm Apple. In order to completely get rid of Qualcomm's dependence, Apple began to switch to Intel's baseband chips in 2017, and in 2018 completely turned to Intel technology. However, Intel's baseband chip has a significant performance gap with Qualcomm products, directly affecting the iPhone's signal receiving capabilities. Behind last year's iPhone sales decline, high pricing and signal difference are important reasons for the iPhone's competitiveness.

What makes Apple even more embarrassing is that operators in major markets around the world have begun to deploy 5G networks gradually, and plan to use them on a large scale next year, but Apple can't find 5G baseband chips to use. Intel's 5G baseband chip development was in trouble and could not be delivered in time to protect Apple's use; Apple once turned to Samsung to buy baseband chips, but was rejected by Samsung's "supply in short supply."

Although Apple has set up a baseband chip team at Qualcomm's headquarters in San Diego, and vigorously dig Qualcomm's corner, but the baseband chip is not likely to be truly competitive in three years, the chip giant Intel is the best example. Although Intel started to develop baseband chips to meet Apple as early as 2015, but years of research and development did not exchange for real product competitiveness, not only on the LTE baseband chip and Qualcomm there is a significant performance gap, on the 5G baseband chip is Got into the predicament of the card.

Huawei? Not likely. While Huawei is openly open and willing to sell its baseband chips to Apple, it must take into account political considerations in the current complex context. While reluctant to get involved in politics, Cook needs to maintain good relations with the government and avoid potential political risks. Indeed, Cook's relationship with the Trump administration is among the closest among American technology companies. After being mistakenly called Tim Apple by Trump, Cook changed his Twitter name to Apple.

Apple may not think that he will fall into this dilemma. Apples facing the predicament of no rice can't afford the tragic consequences of the iPhone without the baseband in the 5G era. Reconciliation with Qualcomm has become the most favorable solution for Apple. After reaching a settlement today, the iPhone continued to have Qualcomm escort in the 5G era, ensuring future product competitiveness, and last year's pure Intel version of the iPhone became the most embarrassing generation.

After the two sides reached a settlement, they will review the century lawsuit in the smart phone industry. Patented technology has become the determining factor. Even though Apple is the most powerful technology company in the world, it is always subject to Qualcomm in the core patent technology. In the field of baseband chips, it is in the midst of a lack of rice and is forced to reach a settlement with Qualcomm. Qualcomm, with decades of research and development investment and technology accumulation, has a strong patent pool, and finally laughed to the end.

Sina Technology Zheng Jun from Silicon Valley, USA

related articles:

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Analyst: Reconciliation with Apple is a major victory for Qualcomm. Little impact on Intel

Qualcomm and Apple's settlement agreement interpretation: the two sides canceled all litigation to achieve six-year authorization

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