The willingness to maintain or expand the cross-licensing agreement is a big part of that. The implicit trade value in that agreement is that they get access to our non-CE patents and our relationship with Apple, and we get access to their manufacturing capacity, part-size capability and cheaper formulation.
If that win-win balance changed slightly in LQMT's favor for a time (a big US contract that could have been Eontec's for example) Li could ignore it for the good of the long-term, global strategy. "Left pocket or right pocket..." as Josh would say. Now, the government controller could decide that Li is out to enrich himself via LQMT at the expense of China, and restrict the agreement with LQMT.
This hasn't happened yet, but it COULD happen. The fact that it could happen, means that Apple might get cold feet. I doubt it. As long as Apple is centralizing the production of the iPhone in China, they will run into this issue. Instead, they will look for leverage.
1. Apple wants to distribute production regionally.
2. Apple needs BMG
3. Apple invests in LQMT formula
4. Apple can't get price low enough due to material cost, throughput and high-gloss, one step issues.
5. Li has BMG but needs big time funding and strategic partners to expand to Apple-sized production levels.
6. Apple wants Eontec's BMG and potential capacity, but wants exclusivity.
7. Apple convinces Li to buy into LQMT with promises of treasure and fame.
8. Li borrows and joint ventures to build capacity from NPO and state involvement. You are here.
Apple still has the leverage. Apple manufacturing with Eontec benefits China. If Apple wants to manufacture in the US in the future, it needs/wants Li to have LQMT. Therefore, China wants the LQMT relationship.
China also realizes that moves to help its local phone manufacturers need to emphasize the sale of those phones, but not the manufacture of those phones. Apple is going to sell phones worldwide. It would be silly to push Apple to the point where they manufacture elsewhere in the short term. On the sales side, they can subsidize the locals to allow a more competitive market.
Back to the timeline...
9. Apple begins building out its regional manufacturing capacity. As it gets closer, it loses leverage in China. If Apple loses leverage, LQMT loses leverage.
10. LQMT formulations will/need to be competitively priced for mass production at this point. This removes cross-licensing leverage by the Chinese state, (as we can always switch up formulas) and keeps state involvement to a minimum. China realizes that the formulas are becoming interchangeable.
11. China's 1.3 billion consumers of BMG products become their real power. They now need the model that we all want today...revenue goes to the region where the final product is sold, rather than where it is made.
12. The current 271 LQMT shareholders are featured in a Forbes biopic on the "visionaries who saw the future". Interviews will include with Watts as a "man who saw the writing on the wall and wouldn't quit" and with Gorgol showing his stable of supercars as he shills his latest NY Times bestseller. Eagle will reveal that he "knew the plan all along", and Kanadien will single-handedly be responsible for a boom tax revenues in Canada that exceeds the one attributed to the tar sands.
I need to get to work.
AI
