Re: QCOM doesn't make their bottom line from manufacturing prowess. Theirs comes from the ownership and leasing of their intellectual property.
I have nothing to do with QCOM stock and I have never followed it. Thus I know about nothing about the story that QCOM's management has been telling or the story the stock holders have bought into.
Two months ago, news out of Korea (in eetimes I believe) was that Korea was seeing and giving business to QCOM's competitors because their chip set prices were 30% below QCOM's. If QCOM has to lower prices to retain market share, I doubt their bottom line will hold up.
Also, I doubt that the lisc. fees are that huge. For the whole world to adopt QCOM's SDMA standards (China, Japan, Korea, Europe ...), QCOM has to convince all the governments that their CDMA standard is sort of an open standard with very low lisc. fees. Remember China was the last holdout in adopting that standard by threatening to develop their own standards? I doubt that China or any of these government would willingly hand over the power to a monopoly without some kind of guarantee that both the cost of product would be competitive because of availability of different suppliers and that they one day may also develop their own chips within their own countries without having to pay exuberant monopoly type lisc. fees.
I do not have any evidence one way or the other, but if I were to be negotiating for the Chinese government or any government, that is what I would insist on before signing on the dotted line.
Also, in times of capacity shortage, fabs like TSMC and also especially UMC, will increase wafer prices 20% at a pop. Compared to 2% lisc. fees that some guy with a fab has to pay, that will hurt.
Remember we are heading towards a capacity shortage the next two years now ....... A 'big fab that must be kept full' is a massive printing press for money - TSMC/UMC were running at >50% margins the last go-around. Aka, fabless becomes chipless in a hurry in case of a capacity crunch.
I would not be surprised that QCOM is doing or has already done what all the bigger fabless guys did at the last capacity crunch - investing in fab partnerships to secure wafer starts.
I do not know what QCOM's PE ratios or PS ratios are, but if they are lofty like e.g. XLNX, the only way for stockholders to win is for QCOM to hold onto a monopoly for CDMA. QCOM may do just that, but I don't want to bet my own money on that.
patrick |
