The U.S. continues three rounds of suppression to block HiSilicon’s high-end chip foundry approach

Three consecutive rounds of suppression by the United States eventually blocked the foundry path of HiSilicon high-end chips, and Huawei's mobile phone shipments dropped sharply. Losing this major Chinese customer, the upstream supply chain of Japan and South Korea was forced to adjust its business strategy and even postpone its listing plan.

However, the US chip manufacturer Qualcomm completed the handover of the "top leader" at Huawei's most difficult time. In the case of Kirin's high-end SoC facing out of print, whether it is Huawei's mobile phone that finally uses Qualcomm chips, or Qualcomm's major customers such as Xiaomi take away Huawei's mobile phone share, Qualcomm will undoubtedly benefit.

"We will be bigger in China." On July 1, local time, Qualcomm's newly appointed CEO Cristiano Amon made no secret in an interview with Reuters that the US sanctions against Huawei provided the company with An opportunity to create more income.

Qualcomm is not peace of mind

At present, the mobile phone chip business is still the mainstay of Qualcomm's revenue. Among the company's $16.5 billion chip revenue in its most recent fiscal year, cell phone chip revenue reached $12.8 billion. Some of Qualcomm's major customers, such as Xiaomi Group, OPPO and Vivo, are all Chinese companies.

Under continuous US sanctions, Huawei's smartphone business was forced to narrow, and its market share in the first quarter fell out of the world's top five for the first time in many years. Reuters pointed out that Qualcomm is looking forward to a substantial increase in revenue as Android users flock to rival Huawei mobile phones such as Xiaomi, OPPO and Vivo.

However, HiSilicon has encountered difficulties, and Qualcomm is not sitting back and forth.

First of all, in China, the world's largest smartphone market, Qualcomm has to face competition from MediaTek, Apple, and Unigroup.

According to data released by CINNO Research, a market research organization, in May this year, MediaTek ranked first in China’s smartphone SoC shipments with 8.7 million shipments, a year-on-year increase of 51.9% and a month-on-month increase of 8%; Qualcomm ranked first with 7.7 million shipments. Second, the year-on-year declines were all about 4%; Apple’s A-series processor shipments ranked third with 3.4 million, a year-on-year decline of 6.2% and a month-on-month increase of 8%.

CINNO analysts told Observer.com that the low-end market is the main source of increase in 5G penetration at the current stage. Qualcomm lacks competitive products in this market, so its share is eroded by MediaTek. After the HiSilicon incident, a small portion of high-end processors flowed to Apple, and most of them were acquired by Qualcomm. At the same time, MediaTek is also actively attacking the high-end market after gaining a foothold in the mid-range market. In addition, this year's Qualcomm Snapdragon 888 performance and power consumption Oops, Qualcomm's high-end market position is not stable, and there is a risk of being further eroded by MediaTek or other manufacturers in the future.

Looking at the global market, the report of the research organization Counterpoint shows that in the first quarter of 2021, MediaTek’s market share in the smartphone chip market reached 35%, ranking first for the third consecutive quarter; Qualcomm has a 29% market share. Ranked second, the share gap with MediaTek expanded to 6 percentage points from 4 percentage points in the previous quarter.

It is worth mentioning that in CINNO’s May shipment list, the Chinese mainland manufacturer UNISOC shipped 800,000 mobile phone SoCs in the Chinese market, making it into the top five of the list, a year-on-year increase of 6346.2%, month-on-month An increase of 3671%. At present, the company's first 6nm5G chip T770 has successfully returned to the film at the beginning of the year and passed key tests. The 5G terminal equipped with T770 is expected to be mass-produced and launched in the third quarter of 2021.

Ziguang Zhanrui told Observer.com that the company completely missed the domestic market due to technical problems in the 4G era. But as China becomes the world's most important consumer electronics market, Ziguang Zhanrui must come back. However, the competition in the Chinese market is very fierce, and it is not so easy to come back, so the company is still shipping a large number of overseas.

CINNO analysts pointed out that Unigroup Zhanrui Tiger Ben series processors have successfully entered mainstream brands (Honor) by virtue of their strong cost performance, thus achieving rapid growth, but the volume is relatively limited, and the global market 5G development level is uneven. Qi, it is expected that in the short term, Ziguang Zhanrui will continue to focus on the overseas mid- and low-end markets.

Apple is self-developed baseband to replace Qualcomm

In addition to market competition, geopolitical tensions are also considered risks that Qualcomm needs to consider.

Kevin Krewell, chief analyst at TIRIAS Research, warned that Qualcomm may face a “political minefield” due to increased tensions in Sino-US relations.

But Anmeng said the company can do business in China as usual. Despite the political tensions, the company still counts on revenue growth in the Chinese market to power its core smartphone chip business.

In January of this year, Qualcomm's former CEO Mollenkopf (Steve Mollenkopf) announced that he would end his 26-year Qualcomm career and choose to retire. Subsequently, Anmeng, who was responsible for Qualcomm's global operations and semiconductor business, became the successor. This management transfer has been completed a few days ago.

After becoming the new CEO of Qualcomm, Anmeng also announced the news to Chinese netizens on Weibo.

After taking the position of CEO of Qualcomm, another major challenge facing Anmeng is how to retain the Apple customer. After a fierce legal game, all Apple iPhone 12 models are currently equipped with Qualcomm's 5G baseband chip.

But Apple is currently developing its own baseband chips to replace Qualcomm's products.

Michael Walkley, a senior analyst at Canaccord Genuity Group, said, “Although Qualcomm’s situation is very good now, because they are putting chips into all iPhones, the company’s The biggest threat to the long-term P/E ratio is that Apple will one day develop these chips on its own."

And Anmeng disagrees. He said that Qualcomm has decades of experience in modem chip design, which is difficult for any competitor to replicate. As far as high-end products are concerned, the potential market left by Huawei is as large as Apple's opportunity for Qualcomm.

In an interview with Reuters, Anmeng also revealed that Qualcomm will enter the field of notebook chips next year, but has not yet figured out how to compete with Apple.

He said that his strategic plan comes from the lessons learned from the smartphone chip market: It is not enough to provide modem chips for wireless data connections of mobile phones. Qualcomm also needs to provide the "brains" that turn mobile phones into computers. At present, most high-end Android devices are Did this.

Anmeng revealed that as Qualcomm tries to push 5G to notebook computers, it is pairing the baseband with a powerful CPU unit, but Qualcomm does not use the ARM architecture on smartphone chips as it does now. Instead, it believes that if customers want to Apple competes, and it needs customized chips.

As the head of Qualcomm's chip division, Anmeng led the $1.4 billion acquisition of startup Nuvia this year. The founder of Nuvia worked at Apple and helped Apple design some Mac computer chips. Qualcomm will start selling notebook computer chips based on Nuvia technology next year.