5G Deployment Speed Far Exceeds The Previous Qualcomm, Multi Domain Layout Tapping Potential

Song Wenhui diagram

In October 14th, Qualcomm released two messages related to its second generation Xiaolong X555G modem and radio frequency system. First, the world has more than 30 OEM manufacturers using X55, based on this commercial 5G CPE terminal will be released in 2020; the other is Qualcomm launched a new integrated 5G and Wi-Fi 6 fixed wireless access home gateway design reference. This further confirms the acceptance of its products, and also releases the development of high throughput multi domain layout to expand the potential of 5G applications.

Whether in the aspect of operators or terminals, 5G deployment is proceeding at the speed that the previous "G" upgrade has not experienced. Qualcomm chief executive Steve Molenkov (Steve Mollenkopf) told reporters on twenty-first Century economic report that the rapid deployment of 5G was highly welcomed by Qualcomm. "The global market has shown great interest in 5G, and the speed of deployment of 5G is much faster than that of 3G and 4G."

As the "core player" in the field, Qualcomm will face both tremendous opportunities and fierce challenges. Chen Guanzhou, general manager of MediaTek, who has also released 5G SoC, recently spoke in an interview with media including the twenty-first Century economic report, hoping to narrow the gap with the first place in the 5G era. However, Mollenkopf believes that Qualcomm has a competitive advantage in the deployment of 5G: "despite the fierce competition in the 5G market, Qualcomm's current situation is very favorable."

In addition, he emphasized the relationship with Chinese partners. Mollenkopf said that China has taken the lead in the deployment speed of 5G. Qualcomm has actively worked with Chinese operators to fully support 5G deployment and cooperate with China's mobile phone manufacturers to ensure the smooth launch of 5G terminals.

"Rooted in China"

Chinese manufacturers have played a key role in the global smartphone industry. The second quarter of 2019, released by industry analyst Strategy Analytics, showed that the top 5 of smartphone manufacturers included HUAWEI, millet and OPPO three Chinese manufacturers, with a market share of 17.2%, 9.4% and 8.7% respectively. In the process of the rise of Chinese mobile phone manufacturers, the cooperation with Qualcomm has played an important role; on the other hand, the revenue contributed by the Chinese market has accounted for 60% of the total revenue of Qualcomm.

Sino US trade friction once caused concern, but Mollenkopf reiterated Qualcomm's position in the interview: "no matter what happens in the course of trade friction, Qualcomm will always commit itself to long-term technological iterations and ensure the greatest success of China's cooperation." He also said that Qualcomm worked closely with Chinese operators to support the commercial deployment of China's 5G, which would not be affected by trade friction.

Although it is often regarded as a "competitor", there is actually a close cooperation between Qualcomm and HUAWEI. Ren Zhengfei, founder of HUAWEI, has also pointed out in a speech published in HUAWEI's heart and soul community that HUAWEI will buy 50 million sets of Qualcomm chips this year. When HUAWEI faced "regulatory issues", Qualcomm also made efforts. "Every American company will be restricted to some extent by trade regulation." Mollenkopf said, "Qualcomm is currently actively working and striving to establish long-term and stable cooperation with HUAWEI."

Qualcomm China Chairman Meng Pu said that Qualcomm has been adhering to the concept of "rooted in China" for many years, and has a very deep and extensive cooperation with China's industry. "Qualcomm's booth rarely has its own products. It's a product that cooperates with partners." He said.

However, the growth of the global smartphone market has been weak for some time, and the Chinese smartphone market is becoming more saturated. For Qualcomm and Chinese mobile phone manufacturers, in addition to the opportunity to grasp 5G replacement, it is also necessary to achieve the success of Chinese manufacturers overseas. "There is a rare opportunity in it -- in view of the deployment of 5G around the world." Mollenkopf said that Qualcomm will strive to help Chinese mobile phone manufacturers succeed in the market at home and abroad. "Although it takes a lot of effort, we think this is a very good opportunity, which has made Qualcomm an example of cooperation with China's high-tech industry."

Global 5G rapid deployment 4G has not yet been withdrawn.

During the world mobile communication conference (MWC) held in Barcelona in February 2019, Cristiano Amon, the chief executive of Qualcomm, repeatedly stressed that the transition to 5G would be much faster than the previous 3G to 4G. This is exactly what happened since then. The global mobile device Suppliers Association (GSA) updated the LTE to 5G evolution report in August. It showed that 56 operators in 32 countries announced the deployment of 5G during the first year of 5G.

In addition, GSA recently updated the September 2019 5G terminal ecology report, which has announced that 56 vendors have announced or are about to launch 5G terminal devices. The number increased from 100 in the end of July to 129, of which 41 were 5G smartphones. As a contrast, when the first year of 4G came, only 4 mobile operators and 3 OEM manufacturers in the world launched networks and terminals.

Mollenkopf also points out that China has taken the lead in the deployment speed of 5G, especially the number of base stations deployed in the first year. "I am sincerely happy for China." He said that Qualcomm has actively worked with the three major carriers in China to fully support 5G deployment, and also cooperate with Chinese mobile phone manufacturers to ensure the smooth launch of 5G terminals.

However, compared with the newly emerging 5G, the potential of 4G has not yet completely subsided. Ville-Petteri Ukonaho, deputy director of research services at Strategy Analytics emerging technologies (EDT), told reporters on twenty-first Century economic report that 4G has not disappeared, and many regions have not started to transition to 5G. It is expected that in the next few years, 4G phones will continue to be sold in Africa, India and Latin America. In addition, in the foreseeable future, the cheapest and affordable smart phones will still be 4G products.

Take the MediaTek section as an example, it has made it clear that it will play a good role in the second half of the 4G while holding the opportunity of 5G replacement. MediaTek CFO Gu DA has made clear in an earlier interview to reporters on twenty-first Century economic report that although most of the resources will be tilted to 5G, MediaTek will continue to introduce new 4G chip products.

Turning to this "long tail effect", Ma Dejia, senior vice president of Qualcomm and general manager of 4G/5G business (Durga Malladi), pointed out to the twenty-first Century economic news reporter that the current 5G deployment is mostly non independent Networking (NSA) first, which also determines the current combination of 4G+5G. In addition, in some areas such as the Internet of things, 4G will be in existence for a long time. "4G is a very successful technology. We think 4G will last for a while." Malladi says. However, unlike competitors' explicit statements, Malladi did not directly respond to whether Qualcomm will continue to launch new 4G products.

Multi domain layout mining 5G potential

Smart phones' "thriving" may not be able to continue in the 5G era. 5G can be widely integrated with many industries, and this potential also makes 5G capable vendors enthusiastic about expanding their applications.

Qualcomm is also expanding its product portfolio for emerging 5G segments. In October 14th, we announced the launch of a new press release for the reference design of integrated 5G and Wi-Fi 6 fixed wireless access home gateway. Gautam Sheoran, senior director of Qualcomm product management, said, "the reference design is another example of 5G's potential to change other industries beyond smartphones. We are witnessing 5G transformation of transportation, AR and VR, industrial manufacturing and many other industries."

Malladi is introduced in the interview. Compared with mobile Internet and mobile broadband, people talked more about mobile Internet in the 4G era than in the 5G era. "For example, you are creating a cloud document that you want to access and edit at any time, which requires instant data connection."

The tools used to edit documents may be smart phones or laptop computers. "We are also working with many notebook manufacturers to realize this vision." Malladi introduced Qualcomm has released the Xiaolong 8cx computing platform for personal computer 5G connection at the beginning of the year, and in May carried out the exhibition of PC with the platform jointly with Lenovo.

In addition, 5G can also support or generate many new applications of enterprise networks. "It's not our goal to send e-mail at such a high transmission rate (5G)." Taking augmented reality (AR) as an example, Malladi indicates that if we want to make use of AR for distributed and cooperative office work and achieve seamless cooperation among different teams in different locations, we need high-speed connection support.

5G can also promote the development of industrial IOT. "Take automobile factory as an example, we hope to put the 5G modem in the car before the car starts to manufacture, rather than putting it in the end." Malladi, for example, says, "because data generated in the manufacturing process of a vehicle will generate large amounts of data, these data need to be transmitted and analyzed." Once there is support from 5G connections, these data can be better used in local analysis, thereby enhancing efficiency and productivity.

Gao Zhong Fang, senior engineering director of Qualcomm wireless R & D department, expressed his personal opinion on the new "protagonist" in the 5G era. "2G is the era of NOKIA's small box phone, 3G is the era of BlackBerry Email mobile phones, and 4G is the era of iPhone." He said, "I believe 5G will be the era of AR glasses."

Ji pointed out that although it is one of the future directions of development, AR still has many technical problems to be solved. Therefore, it is necessary to put standards into 3GPP to promote the development of AR. "Qualcomm thinks AR is very important and should promote its research in Release 17. But for the different member companies of 3GPP, because of the company's business, leadership and technical level and other reasons, the priority of AR is also different. He said it is not yet clear whether AR will become part of it.

Emphasis on R & D investment and intellectual property protection

From 2G to 3G, 4G and 5G, we can not do without investment in R & D field. According to analysis, the investment in R & D of a leading semiconductor company will account for about 20% of revenue. Even in the semiconductor industry characterized by "high input", Qualcomm's investment in R & D is still in the lead.

According to the financial report, in the 2018 fiscal year (as of September 30, 2018), Qualcomm R & D expenditure amounted to US $5 billion 625 million, accounting for 24.7% of total revenue. It is understood that from the establishment of the third quarter of 2019, Qualcomm's R & D investment has exceeded 58 billion US dollars. According to the statistics of IC Insights in 2017, the total R & D input of semiconductor manufacturers (above $1 billion) shows that the total amount of Qualcomm R & D investment is second only to Intel, ranking second.

However, compared with "semiconductor company", Qualcomm seems to be closer to a "Technology Development Company". The main business of Qualcomm consists of two parts: QCT (Qualcomm chip business) and QTL (Qualcomm Technology licensing business). Despite being widely known as "chip manufacturers", in fact, Qualcomm has launched intellectual property licensing business even earlier than the chip business. Qualcomm started technology licensing business only 5 years after its establishment in 1985.

"Taking into account the application and acquisition of patents takes 3 to 5 years, it can be said that Qualcomm began to establish technology licensing business almost from the date of its establishment." Chen Liren, senior vice president and legal adviser of Qualcomm Technology licensing business (QTL), said: "this is because we are a system solving enterprise, a technology development enterprise, sharing all the technologies into the entire ecosystem. Of course, chip business is one of the forms of technology sharing. " In his view, Qualcomm in the final analysis is "a basic technology research enterprise".

And from the earnings report, QTL also contributed more profits to Qualcomm. In the 2018 fiscal year, although QCT and QTL revenues were 17 billion 282 million and 5 billion 163 million US dollars respectively, the profits were $2 billion 966 million and $3 billion 525 million respectively. Referring to the impact of 5G on QTL business mode, Alex Rogers, executive vice president and licensing of technology licensing (QTL), said that this would be an opportunity rather than a challenge.

"At present, we have signed more than 35 5G technology licensing agreements worldwide." "In addition, some negotiations are still in progress," he said. Our 5G technology licensing business has been very successful, and we expect the remaining negotiations to be successful. "

Prior to this, IPLytics patent statistics company in July updated the 5G standard essential patents ranking also triggered a discussion around the number and value of patents. The report shows that the number of patents required by HUAWEI's 5G standard is 2160, far higher than that of other manufacturers, while Qualcomm ranks seventh in 921.

However, in the report of Derent's 2018-2019 global innovation institution released by Kerry Wei An, Qualcomm was re elected. The report mainly analyzes patent and citation data by four indicators: patent number, patent authorization rate, globalization and influence. The report points out that when examining the strength and quality of the patent portfolio, it not only evaluates the number of patent applications, but also assesses the number of patent licenses, the breadth of patent applications and external citation. Since the launch of the project in 2011, Qualcomm has been among the top 8 in the world.

When asked about the ranking of standard essential patents, Chen Li Ren admitted that it had little meaning. In his view, the standard necessary patents can not be simply measured by quantity. Only considering the number of patents is misleading, the value of patents can only be reflected in the market. "The patent value of Qualcomm is one by one from more than 300 patent licensing contracts." He said, "the past 10 years have proved the value of our patent portfolio in the market."

Chen Liren pointed out that from 2G to 5G, the time of R & D and commercialization is overlapping, which means that when the last generation of technology is not fully commercialized, it needs to develop the next generation of R & D, which requires the company to have continuous R & D investment. "The longer the R & D takes place, the greater the risk is actually, and the higher the demand for patent protection." He said, "our technology licensing business revenue can provide support for our R & D work."

"Our basic R & D and inventions have made an important contribution to the formation of many standards. We have also spent a lot of resources to complete the patent applications, but also help partners create a lot of revenue." Chen Liren said, "from the perspective of business returns, we naturally hope to get a reasonable commercial return."