Does Competitive Advantage of Qualcomm Last?

dragon image source: freepik
girl image source: freepik

To optimize the UI and slash the cost, most smartphone maker giant has developed their own chip – begin with Samsung Exynos, Apple A-series, and Huawei Kirin. Could this trend dethrone Qualcomm as the market leader? Does the competitive advantage of Qualcomm last long?

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In This Issue

  1. The Arm of The Dragon
  2. The Sky Dragon
  3. Adreno, The Eye of The Dragon
  4. Code in Dragon Skin
  5. Investor Key Take away

The Arm of The Dragon: Architecture as Competitive Advantage of Qualcomm

In the PC and laptop market, we have a legacy battle between Intel and AMD1. In the smartphone field, the landscape is much different with Qualcomm seems untouchable in its position as the market leader. Every single year, when smartphone vendor launches their new series – including their flagship lineup – Qualcomm always become the first choice to power2 the devices (almost).

Some of us may ask why Intel very quiet on mobile devices. It is a little bit ironic since the Intel Atom processor powering so many “mobile devices” (read: netbook) before the smartphone era.

The answer lies on the “processor architecture”.

Simply said, processor architecture manages how the operation is done by the chip – processor, and co (memories, GPU). Intel’s (and its rival, AMD) processor are optimized for x86 architecture. Nothing wrong with it, x86 architecture does very well for PC and laptop, it can do various tasks, complex instructions, difficult operations. But when come to mobile device – where power efficiency is everything – ARM architecture is far superior.

The ARM architecture is much simpler than x86 thus it can preserve more power, which means longer battery life. In the term of computing power, ARM is much inferior to x86 – none will draw machine using AUTOCAD in his/her smartphone – and this is why multitasking experience is poor in a mobile device. But for “ordinary” users (read: mass, well, mass means money), it isn’t big deal. They just need to listen to music, browse favorite news, watch Ellen’s show on youtube.

This is the advantage of Qualcomm, its ARM architecture has many advantages over Intel and its x86.

The Sky Dragon: Wireless Modem as Competitive Advantage of Qualcomm

Wait, we have another ARM-based chip, Exynos, Kirin, and the elite A series by Apple, also smaller player, Unisoc and Mediatek. Why the dragon is very special?

Because the dragon reign the sky. Seriously.

Some people may argue that Mediatek with its Helio (the sun of god) series is superior to the snapdragon. Things are, even if it is true, the processor is not a “powerlifting” contest.

What do people do with his smartphone? Checking new youtube videos, listening to music with Spotify, Taking a selfie for Instagram, and sometimes make a video call. All need internet and it can be achieved by a chip inside the smartphone that we call, LTE modem.

And when dealing with a smartphone – which needs to be very slim like a catwalk model – size becomes most constrain. A vendor can’t bulk the phone with a battery so it can last long – no, this is miss universe contest, no place for overweight things. So we need a modem that very energy efficient yet very fast.

Qualcomm is excel in this field.

Wait, we are talking about processor, right? Why shifting to modem?

The advantage that Qualcomm has is, it can integrate that modem with the processor into a single chip, making it more space-efficient thus vendor could add up a larger battery. This Qualcomm capability is unmatched by any other fabrication (but, Apple will catch it by acquiring Intel modem business)

More about the modem, our research shows that the Qualcomm modem consumes 30% less power than rivals with the same speed. And, FYI, Qualcomm is a company that design data3 communication procedure (I don’t know how to say it for reader with no IT background), thus it really familiar with data and how to handle it. So, it is unsurprising that Qualcomm is capable to design high efficient modem.

The use of Qualcomm modem in Apple iPhone even when there is tension between the two bolster the competitive advantage of Qualcomm
even in the fight between, Apple still need Qualcomm modem.

Dragon’s Eye: Adreno GPU

From the modem, we move to another “supporting facility” – The GPU. In ARM architecture which instruction is done in the simplest way, GPU has a bigger role than it is in x86. GPU can handle processor burden thus fastening the operation. Qualcomm with its Adreno GPU is far superior to Nvidia Tegra or Mali GPU. And, like modem, Qualcomm has the capability to integrate into a single chipset.

The power of Qualcomm connection – Snapdragon 8 series processor, Snapdragon X series modem, and Adreno GPU – unleashed in harmony when phones are at full load. Playing Genshin Impact, for instance, Processor needs to execute instruction very fast while at the same time GPU rendering the stunning graphic, supported by high-speed data.

I don’t know any other brand that could compete for this harmony.

Sourcecode: Supporting OS

Some investors may question that Mediatek has a cost advantage over Qualcomm, well, that is true – but we need to see the bigger perspectives. One cost component that slashed by Mediatek is its source code.

The absence of processor source code means the phone powered by that chip can’t be updated for a higher OS version. For instance, The Kit Kat smartphone can’t be upgraded to the Lollipop version. Once again we see how Qualcomm is well prepared for chip market competition.

Investor Key Takeaway

So what we have?

  1. The competitive advantage of Qualcomm composed of its architecture, high-speed processor, modem, and graphic processing unit, and all of that has power efficient characteristic. For industries that highlight the size and portability, the Qualcomm ecosystem is unmatched – and this advantage will last.
  2. Another bear case is, not all people need that characteristic. Not all of the smartphone user is a gamer or content creator, most of them are an ordinary user that ok with the sluggish processor or outdated OS. These circumstances make the competition keep tight for all chipmakers.
  3. Recent development shows us that the laptop is in the process to migrate to the ARM architecture, this is good news for Qualcomm, but we need to keep our feet on the ground since the M1 of Apple still far superior to the Qualcomm version of a laptop. So far, no company has the answer to challenge the M series developed by Apple.
  4. Apple again, the Cupertino side decide to abandon the Qualcomm modem for foreseeable future, this will hit Qualcomm revenue.

At the end, investors need to very careful, Qualcomm product is high tech, sophisticated, and well-integrated. Today it is unmatched – but, remember, in the tech industry, something could change dramatically.

We also encourage reader to visit our analysis of Qualcomm earning.

  1. 2020 here comes a new challenger, the M series from Apple []
  2. It is better to call it as SoC or System on Chip, an integrated board that contains a processor, memories, ROM, and graphic card []
  3. when we speak “data”, we mean the internet data []