this article is compiled by semiconductor industry horizons (id: icviews)

qualcomm: "we hope huawei phones will not completely abandon snapdragon and the two sides will continue to cooperate."

recently, qualcomm announced its third-quarter results. although its net profit was us$2.1 billion, an increase of 18% compared with the same period last year, they are still not happy.

mobile phone chip sales, qualcomm's main source of revenue, grew 12% year-on-year to us$5.9 billion, with revenue from chinese smartphone manufacturers growing more than 50% year-on-year.

ai expands the size of the high-end (mobile phone) market, so even in markets with more modest or single-digit growth, the high-end market is growing faster.

due to some restrictions imposed by the united states, huawei cannot use qualcomm products well, which makes the latter very uncomfortable.

faced with the comprehensive counterattack of huawei 5g and kirin, qualcomm also expressed great unrest and bluntly stated that it is continuing to strive for cooperation between the two parties.“huawei is one of the companies that we have been engaging with, and like others, we are working to advance the negotiations,” alex rogers, president of qualcomm’s technology licensing business, said on an earnings call. “we expect that to continue.”

the u.s. chip giant did not estimate the revenue impact of the revocation of huawei's license. the two companies signed a patent licensing agreement in 2020 after a lengthy legal battle. the agreement is about to expire, and qualcomm said it is still in negotiations with huawei.

this statement contains a lot of information

behind this, a lot of information is revealed. first, the contract between huawei and qualcomm is about to expire. according to reports, qualcomm is still in contact with huawei to try to promote the continuation of cooperation. but the problem is that huawei's kirin chip independent plan launched in the past few years has been getting better and better in performance, industrial chain progress and production capacity. the performance of the latest kirin chip is catching up with qualcomm snapdragon 8 gen3.

rogers once said in qualcomm's earnings call that qualcomm has always been committed to establishing a solid cooperative relationship with the world's leading mobile phone manufacturers, and huawei, as a leader among them, has always been an important partner of qualcomm.

rogers also revealed that huawei will completely stop purchasing qualcomm snapdragon chips in 2024, and has now achieved self-sufficiency in kirin chips. for this reason, rogers expressed some concerns. he said frankly that qualcomm cherishes the opportunity to cooperate with huawei and hopes that the two sides can continue to move forward hand in hand.

three years in the east, three years in the west.

during the three or four years when huawei was sanctioned, american high-tech companies acted extremely arrogantly: microsoft banned huawei from using its system, google banned huawei phones from using the android system, arm banned huawei from using the a9 chip architecture, the bluetooth alliance rejected huawei, and qualcomm imposed a chip embargo on huawei...

four years ago, in july 2020, qualcomm announced a settlement with huawei and a long-term patent licensing contract worth $1.8 billion. this agreement alone accounts for nearly one-third of the approximately $6 billion in licensing fees that huawei has announced to the public.

this shows qualcomm's "strategic advantage" over huawei in terms of patent fees. in addition, huawei also stated that 80% of the $6 billion in patent fees it paid was paid to american companies.

obviously, qualcomm can be said to occupy almost the vast majority of american companies.

in recent years, huawei has been "lying on straw and tasting gall" and constantly breaking through and fighting back. when microsoft's system was banned, it used domestic systems; when android was banned, it developed its own hongmeng system; when arm was banned, it developed its own chip architecture; when the bluetooth alliance rejected it, it developed its own star flash technology; when qualcomm did not provide 5g chips, it broke through 5g radio frequency technology.

under the relentless pressure from the united states, qualcomm's license to ship to huawei has been revoked, which means that the cooperation between the two parties is close to being interrupted. if qualcomm can only license non-5g technology to huawei in the future, then there is really no need for the two parties to continue their cooperation.

does that mean huawei and qualcomm will never have any further dealings with each other again?

of course not. huawei and qualcomm have cooperated a lot in patent licensing. looking into the future, cooperation will be the main theme, not confrontation.

let us get a feel for huawei’s chip strategy from ren zhengfei’s evaluation of qualcomm below.

ren zhengfei's ten comments on qualcomm

1. always friends

participant: i would like to hear your views on the china-us trade war.

ren zhengfei: the united states is very strong in science and technology. it is a society ruled by law. it has very complete protection of intellectual property rights and respect for talents, which has led to a very strong driving force for innovation. cdma wireless technology began in the 1940s. in the field of communications, the united states reached its peak in the 1960s, when i was just entering college. our company has only been involved in wireless communications research for a few years. it has only been a dozen years since we started. we have only worked hard to make our products and engineering projects better. the 5g standard is the result of the joint efforts of all mankind. it is also the result of the efforts of dozens of companies, tens of thousands of scientists and engineers around the world for more than a decade. huawei is just one of the more hardworking ones. there is still a long way to go, and i don’t know if we can keep up. only when we recognize the advanced and know the strength of others can we know how to respect the creation of others. even if we are truly ahead, we will license others fairly and without discrimination. we will never use our advantages to blackmail society, nor other countries or other companies.

we will buy 50 million chips from qualcomm this year. we will never go to the opposite side. we are all creating for mankind. we will always be friends with intel, broadcom, apple, samsung, microsoft, google, qualcomm... i hope you scientists will lead a larger successor team and work hard to charge forward, and have so many advanced elements and advanced theories like the united states, so that our black soil will be more fertile, and we can also make advanced products to serve human society and survive.

—— ren zhengfei’s speech at the symposium with fellows and some european research institutes on may 15, 2018

2. without original inventions, there would be no future qualcomm.

reporter: why hasn't china produced companies that develop through intellectual property licensing models like qualcomm? there are some companies in shenzhen that have their own intellectual property rights, but due to intellectual property lawsuits and blockades by foreign companies, they have no choice but to move downstream in the industrial chain. i would like to ask you, how should china's intellectual property system be adjusted?

ren zhengfei: if we treat intellectual property as property rights, the country's technological innovation may be better. if intellectual property law is part of property law, infringement of intellectual property is infringement of property rights. such an environment is conducive to original inventions. without original inventions, how can there be a future "qualcomm"? we should realize that intellectual property protection is conducive to the long-term development of the country, rather than an excuse for the west to hold us back.

therefore, our country must first not support fakes or knockoffs, but support and protect originality. it is possible that today's economic development will be slower, but the quality will be better, and more and more competitive companies will emerge.

——on january 17, 2019, ren zhengfei accepted an interview with chinese media

3. qualcomm just wants more money

reporter: some people say that there is inevitable conflict and confrontation between china and the united states in cyberspace. what do you think about this?

ren zhengfei: i think the world should not move towards confrontation. the ultimate goal is for countries to live in peace. i do not support an arms race. if we spend less money on arms, people will become happier. i think that people will not fight for something in cyberspace. huawei has licensed intellectual property rights to apple and qualcomm. however, the licensed commercial data is confidential under the agreement, so i cannot disclose the commercial agreement. because we have signed intellectual property licensing agreements with many american companies, we live in peace and have no conflicts. therefore, there should be no conflicts in society in the future. if i assume that "you are an enemy" and you assume that "i am an enemy", we will become real enemies. if i assume that "you are a friend" and treat you better, you will buy me coffee and i will buy you steak. if we interact more, won't we be friendly? in this world, china and the united states must shoulder the responsibility of world peace, because the responsibility of these two countries is heavy. however, compared with the united states, china is still far behind. a large number of chinese products are low-value, and these products fill a part of the space. the united states has a large number of high-value, high-tech products, which are actually exchangeable. i think it's funny that the united states says "don't sell chips to china". why not do it if there is money to be made? if you don't sell it to it, it will force it to make this thing one day, and you won't be able to sell it to anyone you want.

i think the world should be a world of integration. the internet cannot be used for war. how can the internet be used for war? i think it is impossible. i never think so and i will not participate in it. what i sell to the world is a "water pipe" with "water" flowing in it. what i sell is an information pipe. 5g base stations can release "water" and information like a "faucet". i do not control the network equipment. the network equipment is controlled by the operator, not by me. the operator controls it after buying my things. the sovereignty still belongs to the country where it is located. i think we will not support such a fight in the future. as for each country wanting more intellectual property rights, wanting to do more things, and being afraid of paying more to others. the lawsuit between apple and qualcomm is essentially that apple pays less to qualcomm and qualcomm wants more money. in fact, this is a dispute over commercial interests, not a political dispute. i think we should let them fight slowly and see how to benefit society.

——on february 19, 2019, ren zhengfei was interviewed by cbs

4. 50% continue to buy qualcomm

reporter: can huawei cope with the pressure from the united states? can it continue to develop well without the united states?

ren zhengfei: if the united states separates itself from us in terms of technology, can huawei continue to operate? i believe that the world should cooperate for mutual benefit, because the foundation of a globalized economy is interdependence, and it cannot exist in isolation. however, we can now say that even without us supplies, we can survive independently and very well, and may still be the world's number one.

however, we always have great respect for american companies. many american companies are willing to cooperate with us. they are different from american politicians. we will always be long-term strategic partners with these american companies. they are seeking approval from the us government for their supply, and we are determined to buy their products. for example, we have components that can replace qualcomm, but 50% continue to buy qualcomm's, and do not use our devices completely. this is my decision. we must use american devices and cannot take all the benefits for ourselves. we will always embrace american companies. after the historical setbacks are over, our friendship with american companies will be tested even more. only by cooperating can human civilization be pushed to a new level of progress.

——on may 20, 2019, ren zhengfei was interviewed by a documentary on german tv.

5. buy at least 50 million qualcomm chips every year

reporter: we have seen too much about the impact of sino-us trade frictions on huawei. when the real challenge comes, do you have any new ideas?

ren zhengfei: first, business continuity and "spare tire" are the same. the spare tire is to ensure that when the car breaks down, you can change a tire and it can still be driven. continuity is also achieved step by step. in fact, many things have been put into production. when it is put into production, we are not exclusive. half of the orders are from outside. i once wrote an article saying that we buy at least 50 million sets of qualcomm chips every year, so we have never excluded or boycotted them.

the biggest spare tire in the world is the atomic bomb. what is the use of the atomic bomb? it has not been used once since world war ii. however, chinese officials who are promoted basically have the background of the two bombs. one is that they are capable of making the two bombs, and the other is that they are loyal to the country's cause. they are technically reliable and capable, so they can be a minister or governor. we are very envious of being able to become a governor at around 40 years old. we are still looking for a job at 40. "spare tire" has now become a new term and is a normal behavior in our company. he tingbo was also hyped up. she posted it on the night when the united states issued the ban. she couldn't hold it back. she has been very uncomfortable these years. she couldn't hold her head up for so many years.

—— ren zhengfei accepted an interview with chinese media on may 21, 2019

6. we can still fly without qualcomm

reporter: some companies are asked not to provide components and software to huawei. these companies include qualcomm, intel, and google. how long can huawei survive without their components and software?

ren zhengfei: the united states is not the world's policeman. it cannot control the entire world. the entire world will decide whether to interact with us based on its own business interests and positions. for companies that we do not want to interact with, we will fill the "holes". we can fill the holes with iron sheets or paper while the plane is flying. the plane can continue to fly. how long can it fly? we can only tell when we have reached the destination. how can we know how long a broken plane can fly? we hope to fly to the top of the himalayas. our ideal is to reach the top of mount everest. the united states also wants to go to mount everest. the united states climbed the south slope, carrying canned beef, coffee, etc.; we carried dry food, no mineral water, only snow water, and climbed the north slope.

the united states has adopted extreme measures to treat huawei. why is the united states so afraid? the united states is so powerful, how can a small company like huawei be taken so seriously? i feel very excited that it is taken so seriously and its role is exaggerated by the world. i am very grateful that others have given us such good advertising.

——on may 24, 2019, ren zhengfei accepted an interview with bloomberg tv

7. compared with qualcomm, we are very polite

reporter: there are reports that huawei has proposed to charge verizon in the united states $1 billion in patent licensing fees. first, is the $1 billion figure accurate? second, how much money do american companies use huawei's patents but do not pay for?

ren zhengfei: we have nearly 90,000 patents in total, of which more than 11,500 core patents are registered in the united states, and the us government has authorized us. the united states has given us legal rights. the united states is a country ruled by law. it should be said that every company that uses our patents will pay us. verizon is the company that is negotiating patent licenses now. our asking price is reasonable, and they should know it in their hearts. compared with qualcomm, it is very polite, and they should pay. i believe that the united states is a country ruled by law, and american companies will pay patent fees. the $1 billion is the total amount for five years, not including 5g. we will discuss 5g later.

——june 27, 2019, ren zhengfei was interviewed by canada’s the globe and mail

8. just because we have the ability doesn’t mean we will stay away

reporter: in a recent interview, i also heard you say that the united states has given huawei a series of difficulties, but in fact it has also helped huawei and can further accelerate huawei's efforts to become self-reliant. if this is indeed the case, what are the prospects for cooperation between huawei and its current partners, such as intel, qualcomm, and micron, in the future?

ren zhengfei: if the us government allows us companies to sell components to huawei, even if we have these components ourselves, we are determined to buy them from us companies. this was the case in the past. last year, we purchased 50 million kits from qualcomm. although we have a complete kit of our own and can survive without qualcomm, we still have this attitude now.

the consistent principle of our company's procurement system is not to choose a single supply channel, but to have two or three suppliers in the world supply components at the same time. if only one supplier can supply, we will develop components ourselves as a backup. therefore, our ability does not mean that we will stay away from the united states. we will continue to embrace american technology companies and there will be no change.

——on july 17, 2019, ren zhengfei accepted an interview with yahoo finance

9. we are waiting for qualcomm's progress

reporter: in this crisis, are you still a ceo or a leader of a company? in the construction of european network connection infrastructure, if huawei is still excluded from the core network, will it delay the deployment of 5g in europe?

ren zhengfei: first, at this critical moment, i am the most suitable person to continue to serve as ceo. i have the ability to lead this company out of darkness and into light. even without help from the united states, the company will continue to develop well, survive independently, and survive well, and be at the forefront of the world.

5g base stations themselves do not open information packets, and the transmission system does not open either, so there is no information security issue involved. information packets are only opened when they are transmitted to the core network. british prime minister theresa may was right when she said that "the uk can purchase huawei products for equipment other than the core network." recently, british mps also said after a debate that "only by using huawei's core technology can the most advanced technology be achieved." from this point of view, it is the european countries and operators who make the choice.

the 5g licenses issued by china and the 5g networks built by operators are still a hybrid 4g and 5g network model. huawei is the only company in the world that has completed 5g independent networking. china's bidding law stipulates that three companies must have completed it before bidding can begin. therefore, china can only start independent 5g sa networking from next year. we are waiting for qualcomm's progress.

——ren zhengfei was interviewed by italian media on july 18, 2019

10. qualcomm and huawei cannot have two sets of standards

reporter: in the future, there will be technologies that only china or only the united states has, forming two technological circles, or even two economic circles, china and the united states. do you think this is possible?

ren zhengfei: no. if the chips made by qualcomm and huawei cannot communicate with each other, then one person will have to carry two mobile phones. you see, it was very difficult to export files from mobile phones in the past, but it is very fast now because there is a unified standard. therefore, two standards or three standards will retard the progress of the world. some politicians may think so, but people will not choose to go down this path.

——on october 16, 2019, ren zhengfei was interviewed by japan’s kyodo news agency

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