Apparently the Qualcomm Snapdragon 810 chip had a nasty habit of overheating when Samsung came to test it. Samsung will use its own processors instead.
This would be a huge blow to Qualcomm which is the world’s largest maker of semiconductors used in phones, and has been supplying Samsung with chips that run the company’s best-selling handsets for ages.
Samsung is Qualcomm’s second-largest customer, providing about 12 percent of its sales, according to Bloomberg supply chain analysis.
It also gives Samsung a reason to boost its own processor-making division as it spends $15 billion on a new factory outside Seoul.
Samsung is expected to release the next Galaxy S as early as March, and it can’t dare to take the risk to use any of the chips in question for its most important model.
The company has been taking a kicking lately as smartphone sales slow. Releasing a phone into the market with a hot chip could sink it.
Qualcomm has not commented on the news shares fell on the news. In Europe they fell to 1.2 percent. Samsung shares rose 1.7 percent as news got out.
Qualcomm said in April its latest 808 and 810 processors will start appearing in phones at the beginning of this year and will feature more advanced computing, graphics and radio capabilities. Xiaomi and LG are among the manufacturers preparing to release models with the Snapdragon 810.
Word on the street is that other countries are going to have a look at the firm’s highly profitable patent licensing business, and may even call into question its worldwide contracts with smartphone makers such as Apple and Samsung.
China’s National Development and Reform Commission (NDRC) is close to completing a 13-month investigation into the US chipmaker as soon as possible. It will almost certainly mean that Qualcomm will have to write a cheque for a record fine and change the way it licenses its technology to handset makers in China.
Qualcomm has tried to paint the situation as being part of the sort of problems western companies have working in China but it seems that the mess will not end behind the bamboo curtain. Anti-trust probes in Europe and by the US Federal Trade Commission (FTC) seem to be connected to China’s investigation, Qualcomm has admitted.
Qualcomm is the top patent holder for mobile phone technology, including many that form industry standards like CDMA and LTE. Charging royalties based on the mobile phone selling prices, even those made with competitors’ chips, provided more than half of its $8 billion net income in 2014.
The NDRC, one of China’s anti-trust regulators, has said it suspects Qualcomm of overcharging and abusing its market position in wireless communication standards.
Qualcomm is expected by industry sources to agree to changes in how it charges royalties on mobiles flogged in China, which will hurt its bottom line.
It could affect its contractual relationships not just with local manufacturers such as Huawei, Lenovo, ZTE and Xiaomi, but also with bigger global players that make and sell phones in China, such as Apple Inc. and Samsung Electronics.
The three said that they managed to achieve download speeds of up to 410Mbps when going downhill and with the wind behind it.
It is the first time that LTE Category 9 testing has been tried in Europe and should dramatically improve EE mobile broadband speeds across greater areas.
The test has proved the operator can aggregate 20MHz of 1800MHz spectrum with another 20MHz of 2.66GHz, and a third carrier of 15MHz of 2.6GHz.
Apparently they conducted the test using QTI’s Qualcomm Snapdragon 810 processor and an integrated LTE-Advanced modem, on Huawei’s commercial infrastructure solution across EE’s LTE-A 4G+ network. Double sided sticky tape was not used and apparently the tests were conducted in front of a responsible adult.
Qualcomm said that transitioning from Category 6 to Category 9 LTE-A connectivity will mean 1.5x faster peak download speeds, swift application response times, reliable connectivity and connections to the fastest networks.
EE claimed that using its remaining 15MHz of the 2.6GHz spectrum enables the fastest speeds and an increase in capacity across its network.
EE’s director of network services and devices, Tom Bennett said that working closely with Qualcomm and Huawei on the next generation LTE Category 9 connectivity enabled the company to make full use of our spectrum holdings, and continue to offer world class network capabilities, innovating to stay one step ahead of operators in Europe.
Huawei described the test as “a truly ground breaking moment” in the move towards the 5G era. However, none of the firms confirmed when these speeds will become a reality.
Figures released by IHS Technology show that global revenues will be worth $353.2 billion this year, a rise from $322.8 billion in 2013.
Dale Ford, chief analyst at IHS, said the growth is broad based – a nearly all semiconductor suppliers have benefited.
IHS segments the semiconductor market in 28 ways, and Ford said that 22 of those have grown this year, compared to 12 showing growth in 2013.
DRAM and flash memory were the movers and shakers in the market, and while revenues for those sectors have risen by around 20 percent, other segments are also showing healthy growth.
DRAM and light emitting diodes (LEDs) have shown growth, and microprocessor markets are also showing strong growth.
Mediatek and Avago are showing strong growth in the semi league table.
Major vendors are engaging with the formal standards process, according to ABI Research. Those include Alcatel-Lucent, Ericsson, Huawei, Intel, Qualcomm, Samsung, mobile operators and academic bodies.
Research director Philip Solis sad: “These companies are all waving their 5G flags, although 5G definitions and visions remain very vague. But this is not merely marketing. These companies are most certainly putting a stake in the ground that will leverage their, work, competitive strengths, and, most crucially, patents.”
He said that Qualcomm in particular is keeping its head low, but other vendors such as Apple and Google are getting actively involved.
Solis said that efforts by vendors to use their patents will be fiercer than for 4G.
But despite the competitive edge, Solis said that companies are working together “so the standardisation process can hit the ground running”.
The surprise move shows how Chipzilla is deepening ties in a market that is proving increasingly troublesome for rivals like Qualcomm. It also is unlikely that Intel got the sort of sweeteners for the deal which it expects from the US and Israeli governments to set up shop.
Intel said it will receive local and regional government support for construction, but it would be less likely to be the sort long term tax perks that Intel is used to.
Intel executive vice president William Holt said in the statement. “The fully upgraded Chengdu plant will help the Chinese semiconductor industry and boost regional economic growth.”
The announcement comes three months after Intel purchased a minority stake in a government-controlled semiconductor company to jointly design and distribute mobile chips, an industry that China considers to be of strategic importance.
Intel is doing better in China than Qualcomm which is expected to announce that it is writing a huge cheque to make Chinese antitrust regulators go away.
China’s investigation into Qualcomm and Microsoft have prompted an outcry from foreign business lobbies. They say the Chinese government is increasingly adopting strong-arm tactics to yield technology-sharing or other arrangements beneficial to domestic industry.
Analysts say there is a broad recognition that foreign companies must do more to stay in China’s good graces.
Chipzilla has taken the approach that if you want the Chinese government to like you, you have to invest in the local industry.
That’s the opinion of market intelligence company Trendforce which said 1.17 billion smartphones left the factories this year and 1.31 billion will ship next year.
The reason, according to Avril Wu, an analyst at Trendforce, is because the penetration rate “is already very high while the market is saturated”.
She said that Chinese brands will represent 17 percent of handset shipments in 2015 – with competition intense. Lenovo, Huawei, Xiaomi, Coolpad, ZTE and TCL are competing on price meaning their margins are as thin as a cigarette paper. Trendforce thinks mergers and acquisitions over the next few years will be the inevitable conclusion of this trend.
Meanwhle, the iPhone 6 continues to sell well but brands using the Android and Windows operating systems find themselves competing on price. This will continue in the coming year.
The 4G network, she says, is now in place and will mature next year, with Qualcomm taking the lead over Mediatek in the semiconductor infrastructure required.
But it appears that the chip giant hasn’t given up the ghost on such a plan and, according to Taiwanese wire Digitimes, is likely to pour more cash into the venture.
Intel’s problem is that it has faced overwhelming competition on price from companies that use microprocessors from Mediatek and Qualcomm, based on designs from British chip designer ARM.
Even though Intel has several ARM licences, it declines to use those to compete and wants the market to realise the important part it plays in the mobile arena. Or, to put it differently, Intel is a proud company and doesn’t want to lose face.
The subsidies to vendors have been aimed at tablets with screen dimensions of 10 inches and below, but Digitimes now says it may well extend those subsidies to tablets 12 inches and below.
Intel cannot afford not to be in the tablet business because it wants to be a key player in the so called Internet of Things. Last week the chip giant said it was going to merge its mobile and comms businesses with its PC business, which will effectively disguise the hole in its profit and loss statements in the future.
While 70 million wearables will ship in 2014, that figure will fall to 68 million next year.
That is because the entry of smartwatches into the marketplace will have overlap in functionality.
But the figure is set to rise again in 2016 because lower cost machines will be available along with a variety of different designs.
The push to get people to use fitness wearables is being funded by a number of industry giants including Qualcomm, Apple, Google, Samsung, Microsoft, Nike and Intel.
Gartner sys the five main form factors are smart wristbands, sports watches, other fitness monitors, heart rate monitor chest straps and so called smart clothes.
This last category has the biggest potential for growth, according to Gartner and so-called “smart shirts” are no becoming available. The research firm didn’t say whether the next step will be “smart pants”.
While smartwatches will come in many different price range, those costing $150 or over are likely to include accelerometers and gyroscopes but unlike health wristbands will have to tell the time and have the capacity to send and receive texts.
The internecine war between Google and Apple took a further twist when it emerged that the Cupertino company now holds the pole position on indoor location technology likely to be widely used in shops.
ABI Research said that “Apple has taken the bull by the horns” in the retail market with several firms vying to win the war. Technologies using LED from ByteLight, Qualcomm and Philips and magnetic field technology from companies like IndoorAtlas are going to change the way shops look.
Apple leads the way with its iBeacon, otherwise known as Bluetooth Smart or BLE. Other vendors can license this name for their own products.
Electronic shelf labels using protocols like NFC and BLE are set to increase and app companies are filling the gaps.
Patrick Connolly, a senior analyst at ABI said the world is likely to see the first deployments of light systems next year.
Connolly said: “The widespread availability of BLE beacons makes it very easy for retails to deploy a light system to test the water and measure shopper acceptance.”
He added that Zebra/Motorola, Ruckus and Aruba will combine wi-fi with BLE and other location technologies.
Qualcomm is facing a little trouble in Big China as it is starting to look like its antitrust investigation is going pear shaped. Meanwhile problems collecting royalties could harm its business in China next year.
To make matters worse it is facing similar investigations in the United States and Europe.
Qualcomm should be making a large profit in China. The country is expanding high-speed 4G network is driving demand for smartphones with leading-edge technology.
But it looks like Qualcomm could face a fine of more than $1 billion in China as a result of the National Development and Reform Commission (NDRC) investigation, and the company could be forced to make concessions that would hurt its highly profitable business of charging royalties on phones that use its patents.
Qualcomm admitted that it faces a new probe by the European Commission about rebates and other financial incentives in the sale of its chips. Another preliminary investigation by the U.S. Federal Trade Commission concerns a potential breach of licensing terms.
Qualcomm President Derek Aberle said that his company was co-operating with the Chinese to come up with potential ways to resolve the problem.
Qualcomm has also been struggling to collect licensing revenue from some device makers in China, including local manufacturers the US chipmaker has done little or no business with in the past.
But the fear is that concessions on royalties that Qualcomm is forced to make in China could spread to manufacturers in other countries.
Qualcomm said it was difficult to predict the outcome of the U.S. and European investigations.
The European probe is separate from a four-year-old complaint to the European Commission from a subsidiary of Nvidia over alleged patent-related incentives and exclusionary pricing by Qualcomm.
Qualcomm forecast revenue for fiscal 2015 of between $26.8 billion and $28.8 billion. Analysts on average expected $28.91 billion.
The chipmaker reported revenue of $6.69 billion for its fiscal fourth quarter, ended Sept. 28, up 3 percent from the year-ago period. Analysts on average had expected $7.016 billion.
Qualcomm posted fourth-quarter net income of $1.89 billion, up 26 percent from a year ago.
Nvidia is currently taking Samsung Electronics and Qualcomm to court for using the technology in its phones and accusing both companies of infringing its property patents on graphics chip technology.
Nvidia said Samsung devices made with graphics technology from ARM, Qualcomm and Imagination Technologies illegally use its intellectual property, or IP.
Segars said that the company stood behind its IP and will work with its partners when something like this happened.
Nvidia is not suing ARM or Imagination yet but it did say it would ask the US International Trade Commission to prevent shipments of Samsung devices containing ARM’s Mali or Imagination’s PowerVR graphics architectures, as well as Qualcomm’s graphics technology.
Nvidia has to play this carefully. Nvidia depends on ARM’s technology to make its Tegra chips for tablets and cars.
Segars said that it did “create a bit of a curious situation… But we do a lot of business with a lot of people.”