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Broadcom/Qualcomm a Chip not a QTL Company

A

Arthur Hanson

Well-known member
Broadcom if they take over Qualcomm would become more a chip company by to tossing much of Qualcomm's QTL (Qualcomm Technology Licensing) program aside and charge much lower rates to appease customers such as Apple and primarily become a chip company and derive most of their revenues from selling chips. It will be interesting to see how this plays out in the Broadcom/Qualcomm/NXP game. Broadcom tossing Qualcomm's QTL program and additional cost on chips would smooth things over with many on their customers. Others will be watching to see what business structure wins and how the results play out. The ramifications of this will play out across the entire world chip/licensing structure with even more changes to come.

Qualcomm: Broadcom Would Throw Licensing to the Wolves, Says Bernstein - Barron's
 
Arthur Hanson said:
Broadcom if they take over Qualcomm would become more a chip company by to tossing much of Qualcomm's QTL (Qualcomm Technology Licensing) program aside and charge much lower rates to appease customers such as Apple and primarily become a chip company and derive most of their revenues from selling chips. It will be interesting to see how this plays out in the Broadcom/Qualcomm/NXP game. Broadcom tossing Qualcomm's QTL program and additional cost on chips would smooth things over with many on their customers. Others will be watching to see what business structure wins and how the results play out. The ramifications of this will play out across the entire world chip/licensing structure with even more changes to come.

Qualcomm: Broadcom Would Throw Licensing to the Wolves, Says Bernstein - Barron's
Click to expand...

As much as this would please Apple, it would ironically cause great harm to consumers. Eviscerating Qualcomm's $5 billion R&D budget would disembowel innovation and experimentation, and substitute commoditization. Slowing down the technological trajectory, and hobbling new entrants from China and elsewhere, would be great for Apple, and bad for consumers and competition.

Rasgon is ignorant of the fact that only 10% of QTL's SEP are practiced at the modem level, and 90% are practiced at the device and infrastructure levels. Charging more for modems will not obviate the need for device level licensing, as has been the industry custom and practice for 30 years, nor would it address the thousands of non-SEP commercially important patents, which carry no FRAND commitments and need not be offered for license at all.
 
JeffreyHF said:
Rasgon is ignorant of the fact that only 10% of QTL's SEP are practiced at the modem level, and 90% are practiced at the device and infrastructure levels. Charging more for modems will not obviate the need for device level licensing, as has been the industry custom and practice for 30 years, nor would it address the thousands of non-SEP commercially important patents, which carry no FRAND commitments and need not be offered for license at all.
Click to expand...

If I understand it correctly, many IP license fee in PC industry are based on the component's value itself, not the whole PC or server value.

Also it's debatable that why Qualcomm deserves to take a bite based on the whole device value. For example, a new iPhone X 64GB model costs about $370.25 to make. Among them, the AMOLED screen costs $110, case $61, Face ID: $16.7, memory: $33.45, camera: $35, App Processor: $27.5. Obviously there are a lot of IP and innovations provided by those components and most of them are other companies' IP and innovations, not Qualcomm's. What Qualcomm insists doesn't seem to be fair to me. Qualcomm is taking money from many other component makers who use their own ability to create their own value, nothing to do with Qualcomm's IP.

iPhone X Costs Apple $370 in Materials, IHS Markit Teardown Reveals | IHS Online Newsroom
 
hist78 said:
If I understand it correctly, many IP license fee in PC industry are based on the component's value itself, not the whole PC or server value.

Also it's debatable that why Qualcomm deserves to take a bite based on the whole device value. For example, a new iPhone X 64GB model costs about $370.25 to make. Among them, the AMOLED screen costs $110, case $61, Face ID: $16.7, memory: $33.45, camera: $35, App Processor: $27.5. Obviously there are a lot of IP and innovations provided by those components and most of them are other companies' IP and innovations, not Qualcomm's. What Qualcomm insists doesn't seem to be fair to me. Qualcomm is taking money from many other component makers who use their own ability to create their own value, nothing to do with Qualcomm's IP.

iPhone X Costs Apple $370 in Materials, IHS Markit Teardown Reveals | IHS Online Newsroom
Click to expand...

There are historic reasons for it, namely before smart phones came along there were no LED screens or cameras or app processors and most of the content was stuff that Qualcom did invent. That model got rolled over to smart phones and, fairly or unfairly, it's what device makers contractually agreed to.


Back to the subject of the OP, Hock Tan makes deals to make money. If he's wants to sell QTL there is a financial reason for that. There was a theory posted that the acquisition could be partially financed by selling QTL to a consortium of phone makers. That makes a lot of sense to me. Broadcomm could pay half the acquisition costs and cut a ton of R&D spending by spinning off QTL.
 
I should also add that Broadcom/Qualcomm does not need QTL to remain a monopoly. The resulting company would be a horizontal monopoly. No other company could bundle RF-modem-app processor-Wifi-Bluetooth-NFC-power management-ect. No-one else could compete.
 
$10/iPhone? What's that device worth without a competent hi-speed cellular data connection? That's an easy question to answer. It would be called an iPad Touch, and available for $189.99, retail. This has nothing to do with the $10, given Apple's bloated profit margins, and everything to do with choking off the R&D money that allows Chinese device makers to enter the market and compete against Apple, while charging far less for equivalent technology. It's anti-competitive conduct by Apple, intended to harm consumers.

If you want to see excessive charging, how is it that Apple gets a 30% cut of all in-app transactions made by iPhone?
 
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