Some market analysts pointed out that China Mobile's 4G mobile phone will be fully sold, which will benefit Qualcomm, the largest mobile chip manufacturer in the US, because the company is currently the main mobile chip supplier for 4G mobile phones.
China Mobile's network upgrade will be the biggest growth opportunity for the telecom industry this year. According to data from China Mobile's official website, as of the end of February this year, the total number of corporate users reached 775.6 million, of which 4G network users were only 1.34 million. Mark McKechnie, an analyst at investment firm Evercore Partners, said recently that "if investors want to seize the opportunity of China's 4G mobile phone expansion, they should buy Qualcomm's stock." Qualcomm stock "buy" rating.
China Mobile expects that by the end of this year, the company will sell about 100 million 4G handsets supporting LTE. Currently, only Qualcomm and Marvell Technology Group support five-mode LTE chip manufacturers, which provide chips that can connect to more networks.
For Steve Mollenkopf, who just became CEO of Qualcomm on March 4 this year, a deeper entry into the Chinese market is a top priority. According to TIm McDonough, VP of Qualcomm Marketing, “We invested in long-term evolution technology very early, and this market did not exist at the time, which also led us to lead in the current market competition.â€
China's challenge
Qualcomm's chips and technologies are currently the main components of the Apple iPhone and Samsung Electronics Galaxy series products, but Qualcomm's development in the Chinese market has been facing obstacles.
The devices in China Mobile's network currently do not use Qualcomm's chips, mainly because China Mobile has adopted the 3G standard independently developed by China. In November last year, Qualcomm said that the National Development and Reform Commission began an anti-monopoly investigation of the company. Qualcomm said that the NDRC did not disclose the details of the investigation.
MediaTek follow up
China Mobile's upgrade will also test whether MediaTek and other vendors can resist competition from Qualcomm. Qualcomm introduced faster-running chips more than two years ago and last year accounted for 100% of the global long-term evolution technology integrated processor market. According to statistics from market research firm Strategy AnalyTIcs, Qualcomm's share of the global mobile processor market reached 64% last year, followed by MediaTek's market share of 12%.
Sravan Kundojjala, an analyst at Strategy AnalyTIcs, said that Qualcomm has at least three quarters of lead in the long-term evolution technology chip market, so competition in the market will be fierce next year. Gu Dawei, chief financial officer of MediaTek, said that the company occupied 35% to 40% of the Chinese smartphone chip market last year and is in a hand-to-hand battle with Qualcomm. He said that although Qualcomm is an early leader in long-term evolution technology chips, MediaTek's current gap with Qualcomm is only one to two quarters, far better than the 7-8 quarters when 3G wireless technology was pushed away.
Competition
MediaTek expects that the company will sell 10 million to 15 million long-term evolution technology chips this year, 80% of which will be sold to the Chinese market. Gu Dawei said that the company's goal this year is to sell 300 million smart phone chips. Therefore, the impact of China Mobile's use of five-mode mobile phones to MediaTek's sales for the whole year will be extremely limited.
Kundu Jiala expects that 70% of China Mobile's long-term evolution technology handsets will use Qualcomm chips this year, and 15% use Marvell chips. Marvell said that the company has already designed chips for China Mobile's 4G network for smartphone manufacturers such as Samsung Electronics and Lenovo.
MediaTek said that the company's chips will begin to be sold in the second quarter of this year, except that most of the company's customers develop products that will not receive subsidies from China Mobile. Intel, Broadcom and Nvidia are currently developing long-term evolution technology chips and are eligible to be included in China Mobile's subsidy policy.
Used globally
Christopher Rolland, an analyst at FBR Capital markets, said that products sold by Chinese smartphone makers such as Xiaomi and ZTE use Qualcomm chips to allow them to enter the export market. Using chips that are compatible with more networks will make it easier for handset manufacturers to sell the same product in multiple countries, saving on research and development expenses. Roland said, "Most manufacturers have a design budget and don't want to launch 13 versions of the phone. People want to design a global mobile phone."
To promote 4G mobile phones, China Mobile expects its subsidy spending to increase by 29% this year to RMB 34 billion (US$5.5 billion).
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