Qualcomm, the tech giant who defeated Apple and dominates 5G

In the battle to dominate 5G technology, the US chip maker Qualcomm has won a major victory.

After more than two years of legal battles with Apple, he signed an agreement in April with the apple company that will allow him to have a dominant position in what will be the link of the future.

• What is 5G and what will it mean for you and your mobile phone?
• Why Chinese justice has banned the sale of most iPhone models in the country

In January 2017, Apple is interposed Two legal actions against Qualcomm alleging that he had abused his dominant position in the modem chip manufacturing market, which allow phones to connect to the Internet.

In July of the same year, Qualcomm, which is the World's leading provider of mobile processors, He accused Apple of violating six of its patents using chips from rival companies such as Intel.

Now, the signed agreement between the two technologies establishes, among other things, that Apple must pay the chip maker an unspecified amount, according to the statement issued by both companies on their website.

Also that society founded by Steve Jobs Qualcomm will continue to use Qualcomm for at least six years as the leading provider of modem chips, without which a mobile phone has no connection.

It does not have to be Apple's only supplier, but it's the only one that has the capacity to allow Apple to compete in the 5G device with its maximum competitor: Samsung.

An advantageous position

And does this Qualcomm game have a privileged position, as explained at BBC World Raquel Perez Leal, doctor of Carlos III University of Madrid and expert in communication system.

"Right now, Qualcomm is the (manufacturer) who is more advanced in the guarantee of 5G technology"says.

• 5G technology is already a reality in some parts of the United States and South Korea: when will it reach Latin America?

"Apple is a leader who targets a very high segment of the market and wants to launch products as quickly as possible, so you can not afford to be late or have lower benefits than your closest supporters, such as Samsung, Qualcomm is currently the one that launched the most powerful modem chip. "

This is why, after a legal dispute of more than two years, Apple decided to bury the dispute and pay.

"According to the information published by the manufacturers and those of the specialized magazines, it would seem that the advantages (of Qualcomm chips) are better than those of competitors such as Samsung, Huawei or MediaTek Inc", explains Pérez Leal.

Qualcomm already has the integrated chip, a format that occupies much less physical space in the device, says López Leal, leaving more room for cell phones to offer other features appealing to the consumer.

In addition, Qualcomm claims to be the only company to have developed the multi-standard chips, a unique tool that can connect to 3G, 4G and 5G.

This is an obvious advantage because the same device can access different networks depending on availability.

Another factor to take into account, says the expert, is that Qualcomm's dominant position in the market allows it to offer very competitive products at a lower price by benefiting from economies of scale: the higher the production, the lower the costs and the higher the profit per unit produced.

Few options for Apple

But it's also because Apple has virtually no alternative suppliers, so Qualcomm is almost a monopoly in the industry.

Intel, to whom Apple has entrusted the manufacture of chips during the two years of litigation with Qualcomm, announced several hours after the conclusion of the agreement between the two major technology companies that have withdrawn from the manufacture of chips for 5G technology, claiming that the profit margin was not as great as in other of its products.

Qualcomm is not the only manufacturer of this type of chips. Without Intel, there is also Samsung, Huawei and MediaTek Inc.

But while the first two manufacture only chips for their own devices, the latter provides these components to low-end phones, far removed from the refined product sold by Apple.

Throw is the opportunity for Apple to manufacture its own chips. The reason is clear: "Communications technology is not the strong point of Apple, but the manufacture of user equipment," says expert Pérez Leal.

The giant Qualcomm

Qualcomm is a market leader and has been specializing in wireless connectivity for many years. key player in the development of mobile technologiessays Dr. Pérez Leal.

The only news of the agreement was already signaling the first benefits to the US manufacturer. Their shares rose by more than 20% when it was announced on April 22 that the agreement had come into force.

In addition, the company plans to enter approximately US $ 2.500 million more per year for the supply of its products to Apple, according to the revenue report presented by the technology to its investors.

Income will come, including from collection of royalties Apple for the use of its technology in each iPhone sold, but it is unlikely that it will ultimately be the consumer who will eventually pay the price.

"As this type of chips is very expensive, Apple may be able to initially transmit, but only partially, that the price of these royalties on the product and the impact on the end customer can be increased," says Perez Leal. In any case, it will be a commercial decision.

According to a Reuters news agency company report, Qualcomm was founded in 1985 and is currently based in San Diego, California (United States). It has more than 35,000 employees worldwide.

Your specialty are the so-called integrated circuits (chips) and the creation of software that mobile devices need to connect to wireless networks, explains the company itself.

But it also markets other products and services for wired devices, but the wireless network market, where it plays a leading role, plays a role of provider to leading mobile and wireless manufacturers such as than Apple and Samsung, which it charges additional fees. use of their patents.

They pioneered 3G (third generation), 4G (fourth generation) wireless technology and are now also a leader in 5G (fifth generation).

Multimedia playback is not supported on your device

Its annual turnover in 2018 was higher than $ 21,000 million, according to the company's financial report, with a profit of more than US$ 6,000 million.

Numbers that make him a technological giant, even if few know it.

You can now receive notifications from BBC World. Download the new version of our application and activate them to not miss our best content.

• Do you already know our YouTube channel? Subscribe!