Qualcomm Helps Datang Snipe Low-end Chip Players

On the 20th anniversary of the founding of the chip company MediaTek, its competitor Qualcomm gave a "big gift" that was not very kind.On the morning of May 26, Qualcomm announced its cooperation with Datang Telecom to enter the medium and low-end mobile phone chip market. Datang Telecom (600198. SH) announced on the evening of the 25th that the joint venture, called Lingsheng Technology (Guizhou) Co., Ltd., mainly focuses on the consumer mobile phone chip market, with a registered capital of RMB 2.984 billion, of which the two capital parties, Beijing Jianguang and Zhilu capital, hold a total of 52%, and Qualcomm and Datang Telecom hold 24% respectively."Based on the price of mobile phone market, we think the main market price is about $100. This market is global, not only domestic, but also foreign. We have considered it." Christiano, executive vice president and President of QCT of Qualcomm technologies. Amun said in an interview with reporters including China first finance and economics after the meeting.

For Qualcomm's cooperation, Wang Yanhui, Secretary General of the mobile phone alliance, told reporters that after 18 months of talks before and after the cooperation, Qualcomm's model is more suitable for capturing large customers. The joint venture should mainly target small and medium-sized customers or medium and low-end customers. This part was not the focus of Qualcomm before, and the future effect remains to be paid attention to.Leverage to stir up the low-end marketDatang announcement disclosed that Lingsheng technology mainly focuses on the consumer mobile phone market, and its business scope mainly includes design, packaging, testing, customer support and sales related to chipset solutions, technology development, technology licensing, technical consulting, technical services and software development.

The person in charge of Qualcomm said that by establishing such a joint venture, Qualcomm can expand the low-end market on the one hand and lay the foundation for new markets in the future, such as the Internet of things.In fact, in the past, although it coveted the low-end market, Qualcomm has always refused to be labeled as a low-end market, and the move of leveraging Datang was evaluated as "very technical"."Qualcomm has always wanted to make high-profit products, such as the medium and high-end mobile phone market, the Internet of things and UAVs. The attitude of the low-end market is that it does not want to give up, but it does not want other companies to become bigger. Therefore, this cooperation with Lianxin should be able to charge licensing fees. Licensing fees are a model that does not need to spend a lot of money but can obtain good profits." Yan Zhan, research director of counterpoint, told reporters.

For Datang, the cooperation with Qualcomm is also a way to break through the existing business bottleneck.According to the financial report, Datang Telecom achieved a revenue of 7.230 billion yuan in 2016, a year-on-year decrease of 15.96%; The net loss was 1.776 billion yuan, while the net profit in 2015 was 28.44 million yuan.Although Datang Telecom began to try to improve its mobile phone chip business in 2014, first authorized its main integrated circuit design enterprise Lianxin technology sdr1860 to Xiaomi mobile phone in November 2014, and then planned to acquire the mobile phone business of Marvell, an American chip company, but it failed to land in the end.

It is reported that the cooperation with Qualcomm has been carried out since the beginning of 2016."We have talked for almost 18 months. Previously, Lianxin personnel have been learning Qualcomm's platform and providing technical support to some Qualcomm customers," Wang Yanhui told reporters.However, some domestic chip manufacturers who did not want to be named told reporters that at present, Lianxin basically stopped the research and development of mobile phone related chips and only did some government procurement and industry customers. If Qualcomm is not willing to do technology input, the impact on the industry will be limited.

Capital promotes marriageThe entry of social capital is an important factor in the cooperation. Beijing Jianguang and Zhilu capital hold 34.6% and 17% respectively.At the press Q & a meeting, the relevant person in charge of Jianguang capital told reporters that investing in the project pays attention to two points. One is its future business sustainability, and the other is its strategic significance to our overall strategic layout.

"Next, we will make a new layout in the direction of communication, combining the advantages of Qualcomm and Datang. We hope the new company can be in a leading position in the world, and we also believe that the company's profit margin is relatively high." the above person in charge told reporters, "We are now focusing on the field of wireless communication, but you can see that in the past development process of wireless communication, mobile phone is only a platform. We think this is a strategic commanding height, so we must invest in it and we will continue to support the company."

It is reported that CCG, an information industry investment platform under China construction investment, has attracted much market attention due to its two large acquisitions of the product line of NXP semiconductor in the Netherlands.In fact, since the State Council issued the outline for promoting the development of the national integrated circuit industry and the formal establishment of the national integrated circuit industry investment fund, the M & a boom in China's semiconductor industry has been ignited. According to incomplete statistics, the total scale of local funds announced by various localities has exceeded 200 billion yuan, which has become an important supporting force in China's integrated circuit ecosystem.In line with this trend, Qualcomm has also established joint ventures with governments and enterprises in many places.

Yan Zhanmeng told reporters that this cooperation is in line with Qualcomm's consistent style, but whether the authorized new companies have Qualcomm's core technology input is the key, such as CDMA integrated IP authorization. However, in the question and answer of reporters, Qualcomm did not explain this issue in detail.MediaTek did not comment on the news.