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  • In 1985, a group of seven people, most of them engineers, and all of them

  • formerly of the tech company Linkabit, formed a company called Qualcomm,

  • short for Quality Communications. Today, a few decades later, Qualcomm is

  • valued at almost $70 billion. But the path it's taken to get there is not without controversy.

  • They charge exorbitant prices.

  • The FTC is really going after Qualcomm's bread and butter.

  • When I saw Qualcomm doing it, first I thought that's never gonna work.

  • The optics of it don't look particularly good.

  • So what does Qualcomm actually do? Because it's not exactly a household name.

  • Qualcomm, they do something with phones.

  • I think I've seen the name but I have no idea what they're doing.

  • No, I've never heard of Qualcomm.

  • Some sort of tech company.

  • Apple and Qualcomm have some kind of, there's like maybe some kind of patent infringement.

  • I think I have heard the name before but beyond that I couldn't tell you

  • anymore at all. And I haven't heard the name Qualcomm before.

  • Qualcomm is the company that has been over the years developing a lot of the

  • fundamental technologies that make cellphones work. And we license that

  • technology to a horizontal model that any company can come in. The other

  • part of the business is our semiconductor business and we produce chips

  • for phones and for everything that the mobile industry has been

  • transforming. You should assume that the absolute majority of the phones

  • today has a Qualcomm processor on it.

  • So fundamentally, Qualcomm invents and licenses technologies and designs

  • semiconductor chips. And as a result it has a massive amount of patents,

  • over 130,000 if you include patent applications, and today licensing those

  • patents accounts for more than half of its operating income. R&D has been

  • a big focus of the company since the beginning. Qualcomm's first big win

  • was pioneering a new wireless technology in the late 80s called cdmaONE,

  • which in 1995 became one of two industry standards for the way cellphone

  • networks work. Along with the competing GSM technology, it defined the 2G

  • area of cellphones. This, along with its growing portfolio of

  • telecommunications patents was what initially secured Qualcomm's position in the industry.

  • They really held a monopolistic position in 3G and 4G. They had the

  • patents, they were the first, they were the best. Every phone you will see

  • in the U.S., you know a few years ago, had Qualcomm modems in them.

  • In every single generation of wireless, Qualcomm had contributed the

  • fundamental technology that actually made that possible.

  • When it comes to chips, it's important to note that Qualcomm is a fabless

  • microchip company, which means it designs them but contracts out their

  • actual production. And it's most well known for a line of processors it calls "Snapdragon."

  • So what we do is we build the core processor that sits inside the cellphone.

  • Qualcomm's really known for something called an "SOC," which is a system on a

  • chip. That's really a computer on a chip.

  • So you can think of the system on a chip kind of like the human brain, the

  • system on a chip in a phone is very similar. So you have a lot of

  • disparate functions but they all work together cohesively with system

  • software and that's what the system on a chip does. If you look at the

  • communications portion of the chip itself, let's say back in 2012 is 100

  • megabits per second. Five years later it was a gigabit per second. So more

  • than a 10 fold increase over five years. And now as you move to the 5G

  • generation we're looking at another 10x improvement in speed that the

  • device and Snapdragon can offer.

  • And right now 5G is a huge deal to Qualcomm.

  • We started investing in 5G technology over 10 years ago, waiting for this

  • moment that would come in 2019 and now we're right on the cusp of that happening.

  • But what does 5G actually mean?

  • If you go back in time and you looked at 2G, what did 2G bring? It brought

  • digital voice, right? So your call was more clear. Then 3G and 4G emerged

  • and that was about more than voice, it was about connecting to the

  • internet. But 5G will expand much beyond that. 5G will enable machines to

  • talk to machines with high reliability. For example an automobile.

  • Automobiles, autonomous driving is emerging. So you want a very reliable,

  • high speed communication between automobiles. That's possible with 5G.

  • A lot of the connectivity features, the 4G and the 5G technology, and the

  • telematics modules that allow us to have Wi-Fi hotspots in the car and

  • leveraging content from the outside. Or even a lot of the cellular V2X

  • technology of getting time-to-green and light information as well as

  • safety features directly from other cars. You're going to start to see

  • that technology very soon in the coming years.

  • In the beginning it's going to be very mobile broadband centric. That means

  • we're going to have smartphones which are going to have, we can experience

  • much higher data rates and much lower latencies. And that is going to

  • change the way we do our own businesses.

  • So 5G is not just a marketing term. It's an actual set of new standards,

  • ultimately defined by the International Telecommunication Union, that will

  • lay out how the next generation of cellphones and other mobile devices

  • will work. But how soon we'll actually be able to buy those devices and

  • have the systems in place to make use of their 5G tech is yet to be seen.

  • A lot of times in the semiconductor industry our marketing outpaces our

  • engineering. So when people say "oh 5G's here," not so much. It'll be

  • years in the making. 3G and 4G Qualcomm dominated the industry. Some

  • people say they may have behaved badly as a result, they were very,

  • monopolistic behavior, and that's good for Qualcomm but that's not good

  • for the industry. 5G is gonna be much more open. Many more companies are

  • participating in it. There's no way Qualcomm is going to have the same

  • position that they've had in the past.

  • Another big focus for Qualcomm right now is artificial intelligence.

  • Qualcomm began our research on AI over a decade ago with Qualcomm AI

  • research. And in about 2015 we started integrating AI onto the chip. What

  • that means is we put special processing capability into our chips to

  • accelerate artificial intelligence.

  • When you combine fast communications with 5G with incredible computational

  • capability with AI then you really have a platform that'll change the

  • world.

  • But alongside Qualcomm's history of innovation is a complex legal history.

  • In March of 2018 the Trump administration blocked an attempted hostile

  • Qualcomm takeover by competitor Broadcom, citing national security

  • concerns. A few months later Qualcomm itself failed to acquire another

  • chip rival, NXP, when it couldn't get Chinese regulatory approval. But its

  • most high-profile cases involve a series of antitrust lawsuits. In 2009

  • Qualcomm was fined $208 million by South Korea's anti-trust agency the

  • Korea Fair Trade Commission. In 2015 it paid a $975 million fine in China

  • after an antitrust dispute. In 2016 it was again fined by South Korea,

  • this time for $865 million. It avoided a $778 million fine from Taiwan's

  • Fair Trade Commission by agreeing to invest $700 million in Taiwan over

  • the next five years. It was fined $1.2 billion by the European Union and

  • right now it's facing an anti-monopoly lawsuit from the FTC.

  • The U.S. FTC says Qualcomm maintains this monopoly over a key type of chip

  • used in cellphones called baseband processors and the government says it

  • does that by using these anti-competitive tactics. For example it says

  • Qualcomm only supplies those chips to cellphone manufacturers if those

  • manufacturers also agree to license patents from Qualcomm on its preferred

  • terms. So the government says that forces those customers to pay these

  • higher fees, these rates and violates competition law. Qualcomm is

  • fighting back very hard because Qualcomm denies any and all wrongdoing and

  • says at the end of the day the government just hasn't actually proven that

  • its business practices in any way harm consumers or the overall broader

  • competitive market.

  • When people sell chips, they just sell the chip. You know, you pay for the

  • chip, like going to the store. Qualcomm had a business model where if you

  • use their chip they got a percentage of the total cost of the device. So

  • this business model is something I've never experienced. When I saw

  • Qualcomm doing it, first I thought, that's never gonna work. But again,

  • they had a monopoly, you had no choice. If you wanted an SOC, if you

  • wanted a modem, if you want to be in the smartphone business you had to do

  • business with Qualcomm.

  • The FTC is really going after Qualcomm's bread and butter which is its

  • patent licensing business and that actually counted for more than 50

  • percent of its operating income in its last reported quarter.

  • The key point seems to be certainly the linking between selling a chip and

  • also asking for a royalty as well as the money for that chip. Why is that

  • something that you continue to pursue? When I buy a car I get all the IP

  • that comes along with that car. Why not when I buy a Qualcomm chip don't I

  • already get the IP that comes along with buying the chip?

  • Well there's a couple reasons. One is if you look at the agreements that we

  • have, we have two separate businesses. The licensing business is about

  • licensing the full portfolio of Qualcomm's patents. Some of them involve

  • the chip, some of them don't involve chip. In fact the vast majority of

  • them don't involve the chip. Then on the chip side we obviously compete in

  • a very, very competitive chip market. And I think when we look at the

  • market there's no way to conclude that that isn't the most competitive

  • semiconductor industry in the world. It is the who's who of people that

  • want to work in there.

  • And then there's Apple. The two companies worked together for years but

  • have now filed multiple lawsuits against each other.

  • We're really just trying to get somebody to pay on a contract that's been

  • in place for 10 years.

  • You have people who are naysayers. One of the naysayers is not an analyst,

  • it's Qualcomm. Qualcomm keeps telling me over and over again, you're going

  • to come to the table, you have to. Lost the suit in Germany, lost the suit

  • in China. Wait till you see them cave. Are you gonna cave?

  • No. The issue that we have a Qualcomm is that they have a policy of no

  • license, no chips. This is in our view illegal and so many regulators in

  • many different countries agree with us. And then secondly they have an

  • obligation to offer their patent portfolio on a fair, reasonable and

  • non-discriminatory basis and they don't do that. They charge exorbitant

  • prices and they have a lot of different tactics they use to do that.

  • So the very basics of these recent legal fights are that the FTC and Apple

  • think Qualcomm is behaving monopolistically. Apple thinks Qualcomm has

  • infringed on its IP and vice versa. And both Apple and Qualcomm think the

  • other owes them money.

  • Let's say somebody who is not as familiar with the company but sees the

  • headlines. Well, they settled with the Chinese after a dispute, it was a

  • billion dollars. Now the South Koreans came after them and it was a $750

  • million fine, they're challenging that. The FTC has come after them,

  • Apple's come after them. I mean the optics of it don't look particularly

  • good for this unique business model you talk about.

  • Well I think it's probably more the result of the industry structure and

  • how powerful some of the people that would like to attack that unique

  • business model are versus the business model itself.

  • And the Qualcomm model is being challenged in another way because companies

  • are increasingly deciding to just make their own chips.

  • Facebook is doing their own semiconductors. Google, Amazon, Tesla. These

  • people from Qualcomm are now everywhere. It doesn't take semiconductor

  • experts to make a chip anymore.

  • Look, there is no question the company has been through a lot, especially

  • in the past year. In one of the most difficult years that we had with a

  • number of legal activities plus a possible hostile acquisition of the

  • company. During that year, the team here at Qualcomm accelerated 5G by one

  • year and some of the products we deliver like the Snapdragon 845 has been

  • one of the best products in our history. And I think that speaks to the

  • resiliency and the capability of the Qualcomm employees. If anything I

  • will say all of the challenges that we have made us to be a much more

  • focused company, make us really understand our core competence and make

  • sure that we continue to do what we do best which is to move the

  • technology forward, drive the new transition to 5G and basically expand

  • mobile to other industries.

In 1985, a group of seven people, most of them engineers, and all of them

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高通(Why Apple And The FTC Are At War With Qualcomm)

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    joey joey 發佈於 2021 年 09 月 29 日
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