Qualcomm: Meet the new boss of everything mobile - zdnet.com
Recent merger activity, a changing political climate, and the company's significant IP portfolio is poised to create a virtual monopoly of mobile and telecommunications technology
This week, T-Mobile US and Sprint announced their intention to merge, which -- if approved -- would create the second largest mobile telecommunications provider in North America behind Verizon Wireless and ahead of AT&T.
The technical details of how the two companies intend to merge their infrastructure and build out an entirely new 5G network are not entirely worked out yet, but one company's technologies will almost certainly become the center of it all: Qualcomm's. Verizon is already a Qualcomm shop, and Sprint is a Qualcomm shop. So, it is probably a foregone conclusion that, for the newer 5G tech deployment, the new T-Mobile will also be a Qualcomm shop.
AT&T, like the existing T-Mobile, uses different technologies for its 4G implementation: LTE, and GSM for voice, which is compatible with global standards. Qualcomm's CDMA, compared with GSM and LTE, is used only in a small number of markets globally, which includes Japan. Many of these mobile data networks are currently being phased out in favor of LTE.
AT&T and T-Mobile, up until now, have gone the path of global compatibility. AT&T has been partnering with Huawei -- the largest manufacturer of telecommunications equipment in the entire world -- on creating a global 5G standard.
Qualcomm could become the world's most powerful telecomThings have not been going so well lately in the US for Huawei and other Chinese firms like ZTE. And despite the initial revenue shortfall that Qualcomm may face by losing access to ZTE, in the long run, it looks like it could be very advantageous for them.
It appears to me that if Huawei is prohibited from doing business here, Qualcomm is positioned to become the most powerful telecom and mobile equipment manufacturer in the world. This includes not just their lines of business for critical components that go into smartphones and mobile devices, but the Internet of Things, cloud SoC processing, Wi-Fi equipment (enterprise and consumer), and carrier equipment (RF, switching, management).
In addition to Huawei, other big losers include Samsung and Intel. The above chart is a mapping of Qualcomm's lines of business versus competitors in the space.
With the exception of Displays, Batteries, and Flash/RAM, Qualcomm is at least as powerful a company as Samsung's semiconductor division in terms of product breadth. The only difference is that Qualcomm has Samsung, TSMC, and others manufacturing components on their behalf.Qualcomm's tech could power most of the major US carriersIf Huawei -- like ZTE before it -- is shoved out of the US, this means that Qualcomm technology will power most (or all) of the major carriers and their devices in the US. Its Snapdragon SoC will power virtually all Android devices sold in this country, and its RF front end and baseband chips/modems will be on virtually every mobile device.
Apple is also in the middle of a lawsuit with Qualcomm and is currently in the process of replacing its baseband mobile chips with Intel's, which have garnered significant criticism in terms of their overall performance and reliability.
With this T-mobile/Sprint merger, it is likely Apple will have to settle this lawsuit and go back to Qualcomm for its 4G and 5G chipsets in order to have carrier aggregation in the US using a single component.
It doesn't make sense to do business with Intel when the entire 5G network infrastructure in the US will be Qualcomm-based. AT&T may be forced to abandon its interoperability and 5G buildout efforts with Huawei and begin conversations with Qualcomm if it hasn't been doing so already.
Qualcomm can make its own phones in ChinaQualcomm, now having the entire share of the US telecom market, can then take its components and make its own phones in China, like it did in the 1990s. TSMC could make the chips, Sharp ( Foxconn) or LG can produce the displays, and it can go elsewhere for flash and batteries. Foxconn can then do final assembly.
Companies like the new T-Mobile and Verizon may also now look to build and brand their own 5G-compatible smartphone devices, with Qualcomm acting as the master ODM/primary contractor.
Potentially, this could threaten the market share of companies like Samsung, LG, Motorola, and even Apple.
There are some unknown variables in this equation, though. Japan's Softbank, which is a majority partner in T-Mobile and will own a significant portion of the new merged company, is also the owner of ARM Holdings, which licenses intellectual property to many companies for semiconductor designs that go into smartphone chips, including Qualcomm's Snapdragon, Samsung's Exynos, Huawei's Kirin, and Apple's A-series.Whether Softbank and ARM will be happy with the idea of king-making Qualcomm at the expense of other large architectural licensees is a big question mark.
Creating a new virtual monopolyIncreasing Qualcomm's industry prominence and creating a new virtual monopoly is not the only potential outcome. Currently, Qualcomm and Huawei have been undergoing interoperability testing for their 3GPP Release 15-based 5G components and have reported success.
If conditions do not continue to deteriorate with China, it's possible that we can avoid the current situation where many phones made for CDMA networks do not work ideally on other 4G LTE/GSM networks.
But, if conditions worsen, we could be due for a repeat, where the standards could diverge and we could find ourselves in a situation where 5G phones built for US networks do not work in major global markets.
With the T-Mobile/Sprint merger, is Qualcomm poised to become the most powerful technology company in the mobile and telecom industry? |
