Qualcomm Feels the Heat (I want my M2M)

POSTED BY Steffen Sorrell
For Qualcomm, the expression ‘it’s tough at the top’ has never been truer in the past few weeks for the company.

Things began badly in 2015 following rumours of its latest SoC (System on chip), the Snapdragon 810 overheating (bad news for mobile devices where enforced thermal throttling reduces performance). Indeed, Samsung’s upcoming flagship model, the Galaxy S6, is expected to eschew Qualcomm’s chip in favour of its in-house design and production.

dragon.jpgAnother dragonblow came this week in the form of an unheard-of fine; $975 million; imposed by China following an anti-trust investigation into its patent licensing.

The skies certainly look cloudy. Samsung, its smartphone profits under pressure from the low- and mid-tier market, is expected to invest over $21 billion in expanding its semiconductor business this year. Its 14nm process would certainly improve the power efficiency achieved by Qualcomm’s struggling 20nm offering; Apple will no doubt look to its Korean rival to supply its forthcoming A9 chip, while increasing competition in the Android-powered SoC world may just tip other manufacturers over the edge where an improvement in process-gained power efficiency negates the need for an integrated on-chip LTE solution (Qualcomm’s forte) somewhat.

Nonetheless, smartphone market growth has slowed down significantly in mature regions. Developing markets will follow. For Qualcomm, one of its key opportunities lies in the M2M (machine to machine) sector – a significant subsection of the broader ‘Internet of Things’ concept. As noted above, the company holds significant IP in 3G and to a lesser extent, LTE. Therefore every 3G/LTE module supplies royalties to Qualcomm and, as we note in our report, some 500 million M2M devices are expected to be cellular-connected by 2018.

Don’t write them off just yet…