| To: N.Novick who wrote (122632) | 11/1/2014 12:14:32 PM | | From: Jim Mullens | | | | NN, re: QCOM loses money near term..............
"...
loses money in the near term on any settlement (meaning earnings not stock price action) because Compamies that ARE currently in compliance (Xiaomi for example) are paying much higher export rates per current rate structure.
Its my understanding that the lower domestic / higher export royalty rates no longer exist, and they were only for pure CDMA devices. |
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| To: waitwatchwander who wrote (122631) | 11/1/2014 12:21:26 PM | | From: N.Novick | | | | China device makers
That's right wait watch. Nail on the head.
China is trying to shift royalty charging over Xiomi and Lenovo ability away from Q and toward Spreadtrum and Huawei because latter have more TD IP in China.
Chinese want to use and export LTE but have Spreadtrum and Huawei, with connections to Chinese academia and government , control IP, or at least charge for a larger share of it.
Chinese plan would shift a certain % of profits from Xiomi and Lenovo toward Spreadtrum and other Chinese IP holders. And note that Spreadtrum chips would not be needed to demand royalties. Chinese are tryign to recreate Q business model and give to certain of the Chinese chip makers to give capital to develop their own internal chip industry.
Chinese have attacked hoping to create appetite among investors to lift clouds of china conflict on Q stock. This is their tactic of pressure. However, and deal where Q tacitly acceded to this plan and legitimizes it could bad for Q in long term, depending on the details of the deal. It may be necessary to have an international legal fight for years , or at least seriously threaten and prepare for one, in order to get china to accept somewhat more reasonable terms of any proposed deal. The minimum time it would take for a stalemate to move the Chinese needle is six months , especially given that Q has no incentive to budge for several more QTRs since it can deliver reasonable results due to iPhone without any china settlement. |
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| To: Jim Mullens who wrote (122634) | 11/1/2014 12:35:42 PM | | From: N.Novick | | | | Jim. Ok
Whatever the current LtE rates are (presumably then in more 'recent' contract terms based on your comment), same concept applies. ....
China seeks to lower those rates to reduce prices and ALSO to shift a bigger proportion of whatever the rates are to domestic Chinese TD IP holders, who represent foundation of future domestic Chinese chip industry. The shift proposed by Chinese is to foster independent domestic chip industry, and to use TD LTE IP to,raise capital for that domestic Chinese chip industry's growth.
It's clear that China sees a key step on this pathway to be the nullification of Q contracts with Chinese device manufacturers, presumably exposing them to suits from TD IP holders ... Suits that would be decided by Chinese judges who work for the Chinese govt, which directly or indirectly owns the entities with TD LTE IP.
China doesn't mind a company Xiomi succeeding so long as there is a tax if you like to be paid to companies like Spreadtrum, to foster a domestic chip industry. The device makers and chip makers are separate. China is determined to create a domestic chip industry, and is using Q as a model for Spreadtrum / rock chip . |
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| To: N.Novick who wrote (122635) | 11/1/2014 1:04:48 PM | | From: engineer | | | | | also, most of these companies are state sponsored and get $B's of either free money or extremely low interest rate money (0.1%). Not so hard to start a company if you have basically unlimited funds to start it. |
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| To: N.Novick who wrote (122636) | 11/1/2014 2:38:26 PM | | From: Jim Mullens | | | | NN, re: China issues………………………..
re: Whatever the current LtE rates
current devices are using Q's multi-mode (CDMA/WCDMA/ LTE) license, not its standalone LTE license.
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Well, I guess China has to do a cost benefit analysis in regards to
(1) nullifying QCOM contracts and losing out in the world marketplace, being publicly identified as an IP pilferer / legal contract violator in order to save a percentage point or two in royalties,
(2) or having their home-grown mobile chip makers compete in the world marketplace as everyone else does (along with having the largess of Chinese govt money funding those enterprises) and benefiting from QCOM’s business model that enables new China companies such as Xiaomi to flourish against the likes of long established world leading companies such as Apple and Samsung.
Also, I wonder how successful Spreadtrum (especially w/ INTCs “help”) and its device manufactures will be in the China LTE market against companies who use QCOM chips (Samsung, Apple, Xiaomi) and pay FRANDly QCOM royalties
Side notes-
1) I wonder how extensively Xiaomi used QCOM’s QRD (reference designs) to bring its devices to market as rapidly as it did?
2) QCOM potential reward as an early Xiaomi investor if IPO’s at $40B
…….1% equity share...$400M
…….5%........................$2B
. …..10%........................$4B
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| To: Jim Mullens who wrote (122638) | 11/1/2014 8:54:48 PM | | From: Jim Mullens | | | | Re: QRD, actual headline- "Xiaomi Owes Smartphone Success to Qualcomm..."
"...1) I wonder how extensively Xiaomi used QCOM’s QRD (reference designs) to bring its devices to market as rapidly as it did?... "
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Feb 2014 Japanese article discusses Xiaomi's early success.
snips>>>
+ A teardown analysis of Xiaomi's popular Mi3 model, released in October last year, by Tokyo-based Fomalhaut Techno Solutions reveals that the device uses U.S. company Qualcomm's Snapdragon 800 as its main processor for handling communications and image processing.
+ Winning formula
The company sells the Mi3 for 1,999 yuan ($329), less than what Apple's iPhone sells for. Xiaomi is able to pull off this mix of high performance and low price thanks to so-called reference designs, or basic designs for smartphones that chipmakers provide to smartphone manufacturers. Reference designs provide such details as parts makers and model numbers. They enable manufacturers that lack technological prowess to develop smartphones, but they also promote a situation in which many companies are making virtually identical products.
From the beginning, Xiaomi has mainly used reference designs to manufacture its devices, allowing it to slash development times and minimize the size of its engineering staff, thereby holding down costs. The teardown shows that Xiaomi adopts parts described in Qualcomm's reference designs. Kashio said this was evident in part because of the many Japanese electronic components it uses.
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Xiaomi Owes Smartphone Success to Qualcomm and Japanese Technology.
asia.nikkei.com
February 13, 2014 12:00 am JST
Xiaomi owes smartphone success to Qualcomm, Japanese technology
HIROKI YOMOGITA, Nikkei staff writer
Its phones are winning a lot of domestic fans thanks to their reputation for offering considerable bang for the buck. The company has vaulted into the top 10 Chinese makers by market share in just four years since its establishment in April 2010.
The secret to Xiaomi's success lies in the use of board designs and components employed by big-name foreign rivals, such as Samsung Electronics of South Korea.
A teardown analysis of Xiaomi's popular Mi3 model, released in October last year, by Tokyo-based Fomalhaut Techno Solutions reveals that the device uses U.S. company Qualcomm's Snapdragon 800 as its main processor for handling communications and image processing. Qualcomm is the world's largest maker of semiconductors for smartphones. The processor was introduced in early 2013 and has been used in high-end models released by Samsung and Sony.
"Xiaomi has made big progress in its product design," said Minatake Kashio, director at Fomalhaut Techno Solutions. "Its exterior design is very similar to that of Sony's. The way it has mounted the inner components is just like Samsung does it."
Winning formula
The company sells the Mi3 for 1,999 yuan ($329), less than what Apple's iPhone sells for. Xiaomi is able to pull off this mix of high performance and low price thanks to so-called reference designs, or basic designs for smartphones that chipmakers provide to smartphone manufacturers. Reference designs provide such details as parts makers and model numbers. They enable manufacturers that lack technological prowess to develop smartphones, but they also promote a situation in which many companies are making virtually identical products.
From the beginning, Xiaomi has mainly used reference designs to manufacture its devices, allowing it to slash development times and minimize the size of its engineering staff, thereby holding down costs. The teardown shows that Xiaomi adopts parts described in Qualcomm's reference designs. Kashio said this was evident in part because of the many Japanese electronic components it uses.
For instance, the company uses Sharp's IPS (in-plane switching) liquid crystal panels for the display and Sony's CMOS (complementary metal-oxide semiconductor) image sensor for the camera. Similarly, it uses many connectors made by Hirose Electric and Japan Aviation Electronics Industry. These are all more or less the same components used in smartphones made by Apple and Samsung. Xiaomi also uses filters and other parts by Murata Manufacturing. and Taiyo Yuden, whose components are also listed in Qualcomm's reference designs.
Parts makers are shifting their focus to how to pitch their products to Qualcomm and Taiwanese "fabless" semiconductor maker MediaTek. This is because parts makers can expect a huge increase in sales if these chipmakers employ their products.
Parts makers have been finding in recent years that a heavy dependence on Apple and Samsung presents certain risks. Weak earnings or other setbacks at these phone giants could take a big toll on their suppliers. Japanese electronic parts makers therefore welcome the rise of China's smartphone makers, particularly Xiaomi, because it spreads out the risk.
Growth opportunity
The competition is relentless among China's smartphone makers, big and small. Such major players as Lenovo Group, Huawei Technologies and Yulong Computer Telecommunication Scientific -- maker of the Coolpad smartphones -- are going head-to-head with such small and mid-tier makers as Oppo and Gionee Communication Equipment. Survival means embracing the latest components in order to offer attractive new functions. That is why there is strong demand for Japanese components, which they regard as a way to significantly add value.
Now that these Chinese smartphone makers are moving into India, the Middle East and Africa, Japanese electronic parts makers are looking to ramp up their shipment volume.
As for Xiaomi, the company is scheduled to launch this year 4G (fourth generation) smartphones compatible with the TD-LTE (Time Division Long-Term Evolution) standard, which could impact the electronic parts market for LTE-compliant products as well. |
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| To: N.Novick who wrote (122636) | 11/2/2014 12:05:23 AM | | From: waitwatchwander | | | | | Your TD-LTE thoughts are interesting. The problem is that the success of Xaomi has lttle to do with Spreadtrum and Huawei and lots to do with Qualcomm. Effort like IP can't be just confiscaed. With Huawei and Spreatrum moving forward without Qualcomm, a transfer of reward from those who helped to those who expended effort elsewhere is hard to justify. |
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| To: waitwatchwander who wrote (122642) | 11/2/2014 6:54:21 AM | | From: JeffreyHF | | | | | Korea was already exporting it, and China lacked the credible handset industry to be an international factor. You seem to be revising the history of the MENS cartel, and its stranglehold on GSM. Yet the deal Qualcomm gave China was far cheaper than the 10-13% stacked GSM royalties, and the technologies were not equivalent. |
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