Qualcomm Inc (QCOM)

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QCOM-IDCC - interesting discussion

Wouldn't it be interesting if Q could package all the IPR for WCDMA chipset customers in the same manner they accomplished for IS-95...and lowering the overall rate that the manufacturers would have to pay if they licensed individually?

With the QCOM licensing model, yes... it would be nice. Unfortunately, companies that work hard to establish their own IP don't necessarily get what's due to them in a pass through scenario...

IMO one of the issues with BRCM is they don't want to sign the standard agreement with Q which gives Q the capability to pass through to their customers any BRCM IP.

Broadcom tends to license not on the terminal level, e.g. the total device, but on a chip level, where the license is a portion of the total cost of the baseband/rf/mac/software stack, and that relieves implementors of additional royalty burden. It's a fixed cost when you buy their chip, it's already priced in.

Qualcomm, on the other hand, says, we'll flat-rate license all out patents, whether you use them or not, but at a price, that being a cut of the the total ASP.

The issue here is that what is the Qualcomm value-added part?

Let's say I'm a handset vendor (truth be told, I'm not). I decide I'm going to make a high-tier handset that has some, and I reiterate, some QC IP in it, mostly related to CDMA.

Then I add my own R&D costs for application, perhaps I make this also a WIFI/WIMAX multiple mode device, and add on Windows CE. Due to complexity of the device, I have to add a coprocessor to the design, and add a lot of goodies that I don't get with Qualcomm's chip or software.

Now... the QCOM impact to my Bill of Materials is 40-50 dollars at most, consider MSM6800, a DO-Rev A chip.

The co-processor, licenses for the upper layer operating system, integration of items that QC doesn't provide, etc...

The BOM is now 200 dollars... add 30 percent for conversion, warranty reserve, and we still need to consider costs of distribution and a decent profit for the effort I've expended on R&D to bring this device to the market...

QC, according to docs on the web, is 5 percent of ASP, not BOM... which is basically a tax on all things in the device, whether there is QC value added or not.

It's not what QC provides, but what they take that is, to be honest, is not their due. The "pass-through" makes things very difficult, as QCOM's share of the pass-through, if any, is not transparent.

This my friends... is the main beef against Qualcomm and their licensing program. I would rather have a fixed cost on the QCOM provided content only...

NOK could, as well as BRCM, could live with a fixed percentage on the chips, not on the product as a whole.

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Disclosure - I'm not an investor in BRCM, I'm still heavy on QCOM, NOK, MOT, and some others (IDCC) in this sector. I've made my opinions known to QC IR...