Qualcomm will reduce charges for CDMA terminals or due to antitrust pressure in China

Recently, Liu Ping, General Manager of the China Telecom Market Department, stated at the "2015 China Telecom Terminal Industry Cooperation Strategy Conference" that starting from December 1, the price of Qualcomm chips will be the same for China Telecom's CDMA network terminals below $1299. Unicom UMTS network terminal "same price".

This CDMA industry chain is "significantly beneficial" and is expected to help each company that uses Qualcomm's CDMA chips to reduce costs by more than $4. In the past, Qualcomm provided the same configuration chip price to the CDMA network as the price of the UTMS network (WCDMA/GSM system dual-mode or TD-SCDMA/GSM dual-system).

According to analysts in the industry, Qualcomm has changed the policy to have MediaTek and Marvell entering the CDMA industry chain. In the meantime, the National Development and Reform Commission's investigation of Qualcomm's anti-monopoly investigation that "the whole machine is the basis for calculating license fees" points to Qualcomm's alleged use of monopoly status to establish " Unfairly high prices."

China Telecom has been fighting for many years

"Qualcomm charges a bit more in CDMA networks. This is a history of the past." Cao Jingsheng, vice president of Coolpad Group, told reporters.

In order to change the status quo of CDMA networks, China Telecom is chaired by Chairman Wang Xiaochu and deputy general manager of marketing Gao Tongqing personally in charge of negotiations with Qualcomm. “Wang and Gao have talked about it from a few years ago, and sometimes they flew for this purpose. The United States flew back again one day," said Liu Ping.

“Qualcomm has an absolute monopoly position in the EV-DO network (ie, telecommunication CDMA network). If other operators’ mobile terminal chip market grows by 10%, Qualcomm grows by 3% to 4%, China Telecom increases by 10%, and Qualcomm’s growth. It can reach at least 9%.” Wang Yanhui, secretary general of China Mobile, said to reporters on the 25th.

Article 17 of China's "Anti-Monopoly Law" stipulates that operators with market dominance are prohibited from "selling commodities at unfairly high prices." In the "Anti-Price Monopoly Regulations" of the National Development and Reform Commission, one of the factors considered as "unfair high prices" is whether the sales price is significantly higher than the price of other operators selling the same kind of goods.

"The same chip configuration, EV-DO has always been more than 5 US dollars more expensive than UTMS." Wang Yanhui said.

Cao Jingsheng believes that there are two possible reasons for Qualcomm to change its policy. “One is to support the development of the CDMA industry, and the other is forced by anti-monopoly pressure to give the government a state of affairs.”

Next year, MediaTek, Marvell, and Spreadtrum are likely to enter the CDMA market. "For example, Meizu's 6752 is already on the market. MediaTek's support for EV-DO's chips will be in volume production in the first half of next year. Now it's time for manufacturers to select models." Wang Yanhui said.

Impact limited to CDMA networks

In the anti-monopoly investigation of Qualcomm, the National Development and Reform Commission announced seven investigation directions. The first direction was “the basis of the whole machine as a calculation license fee”. This is also the unique patent fee collection method that Qualcomm has distinguished from other industries. Terminal manufacturers not only have to pay a chip price to Qualcomm, but also need to pay an "entitlement for the whole machine" license.

For terminal manufacturers, it is generally hoped that government spending will reduce chip spending costs. However, compared to simple price cuts, it is hoped that Qualcomm will change the charging model.

Although there is no clear news that Qualcomm's price cuts are inextricably linked with the NDRC's investigations. However, Wang Yanhui believes that Qualcomm’s chip charges “will definitely drop” and “it will give the NDRC a face.” However, “the patent fees paid by the manufacturers will not be significantly reduced.”

Wang Yanhui explained that even if the billing model of “the whole machine as the basis for calculating license fees” was changed, billing according to the unit price of chips was mainly aimed at the standard necessary patents, and Qualcomm had a large number of other patents in addition to the standard necessary patents.

In the current 4G chip market, Qualcomm chips have not encountered strong competitors. Although MediaTek claims to have sold 30 million chips this year, most of these are ultra-low-end chips and are separate chips from baseband. Wang Yanhui believes that the change of Qualcomm's policy may further help Qualcomm to consolidate its position in the CDMA industry chain.

Cao Jingsheng told reporters that at the current price of 1,299 yuan, Coolpad paid for more than ten or twenty dollars for Qualcomm chips. The current price cut of four US dollars is an encouragement to encourage sales of the terminal, but the scope will not be expanded. All product lines, "CDMA is a relatively closed channel, and the two are not common across many basic hardware."