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Qualcomm’s anti-competitive practice has made flagships more expensive

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The rage has just begun!

This week, Vivo’s new sub-brand iQOO launched the iQOO 3, one of the first phones in India to support 5G. The phone is also available in a 4G variant. But the interesting part is, the two different variants have the same modem and processor internally. There’s no difference hardware-wise.

The difference is on the software side. The brand has simply disabled 5G bands on the 4G variant. Thanks to this bypass, it won’t have to apply for a separate certification which also further reduced the price of the phone. But why did iQOO have to make that choice as these days most 4G modems are integrated on the system on chip (SoC), especially the high-end ones.

Because Qualcomm said so. In December, the American chipmaker announced its latest flagship mobile chipset — the Snapdragon 865. It’s their best mobile chipset to date. But, there’s a twist.

Snapdragon 865: Snapping every OEMs back

  • The Snapdragon 865 is 25% faster than last year’s Snapdragon 855, brings fancy new camera features, and AI-accelerating co-processors. But unlike the previous lineup, this processor doesn’t have an integrated modem, even for 4G.
  • Alongside the processor, Qualcomm also announced a new modem — the X55. It has 5G as well as 4G capability and if you want mobile internet connectivity, it’s the only component that’s compatible with the Snapdragon 865. This means that if an OEM (Original Equipment Manufacturer) wants to use Snapdragon 865, it has to forcefully rely on the X55 for connectivity. 
  • External modems take up more space, run hotter, and use more power than an onboard modem. This means that even a 4G-only phone will have to compromise on performance, even if you don’t/can’t use 5G.
  • With the Snapdragon 855, the 4G modem was integrated onto the chip. If OEMs wanted to add 5G capability, they could externally use the X50 modem. This practically made sense because brands could pick what they want and not force unnecessary “features” down someone’s throat.
  • Qualcomm clarified that it has the technical ability to integrate 5G modem on the same chip, but decided to keep the modem separate this generation to make things simpler for device manufacturers. Qualcomm also promised power-efficiency gains over the last generation. Even Samsung has a separate modem on its flagship Exynos 990 and Apple has always used discrete modems on its iPhone chipsets. 
  • Manufacturers could always (ideally) replace X55 with another modem, but Qualcomm sells X55 and SD865 as a bundle, so that’s not going to happen. 
  • In 2012, Qualcomm released the Snapdragon S4 chipset. It was the first SoC to have an integrated modem. And, this what Qualcomm had to say about it: 

What’s unique about the Snapdragon S4 processor, particularly the MSM8960, is that the modem baseband and application processor are combined into a single chip, optimized for performance and power efficiency. The modem is also multimode, meaning it can fall back to 3G when LTE isn’t available. (Some chipmakers still sell separate 3G and 4G modems – and don’t even try to integrate them into the application processor.)

  • Fast forward to 2020 and Qualcomm now wants us to separate the modem from the SoC. Now, even if you don’t want to use 5G, you’ll have to use its modem to pass 4G data. Directly, consuming more power, taking up more space, and generating more heat.
  • More power consumption means phone makers will have to incorporate a bigger battery. But how will they? An external modem also takes more space. The same space could be used to add a bigger battery or even a headphone jack. And lastly, heat generation directly hampers the processor’s performance. So now, companies will have to be more innovative with their cooling solutions. And wait, that’ll again take more space!

All these years Qualcomm shipped its top-tier chipsets with an integrated modem. Everything was going fine, everyone was happy. Why did it change its mind suddenly? Greed.

  • Qualcomm knows that pretty much every OEM depends on it for flagship-grade processors. Samsung has its own Exynos series and Huawei has the Kirin lineup. However, Samsung cannot ship Exynos phones in the U.S. and needs to rely on Qualcomm has the networks support Qualcomm modems. Huawei is stuck in a massive political battle between the U.S. and China. All other manufacturers like Xiaomi, OPPO, Vivo, OnePlus, Motorola, and more rely on Qualcomm. If not the Snapdragon 865, what’s the alternative? Practically, none.
  • Qualcomm justified the move by saying it wants to encourage 5G adoption. Fair enough. But for an average Joe to adopt 5G, there needs to be 5G availability in the first place. Very limited urban areas in the U.S. have 5G availability and only a handful of countries have rolled it out. When there’s barely any 5G network available, what’s the use of forcing a 5G modem on every Snapdragon 865 phone?
  • It’s clearly evident that the company wants to sell the X55 modem as a separate component. The chipmaker has artificially created a new requirement. It’s something they could’ve avoided but purposely chose not to. 

Qualcomm has a history of pushing everyone against the wall

  • It has a history of dealing with anti-competitive suites, monopoly allegations, and unfair trade practices. Last year, it was embroiled in a high profile case against Intel as well as Apple. At the beginning of 2020, America’s FTC also dragged them to court.
  • It is Qualcomm’s standard practice to license its broad patent portfolio, which includes standards-essential patents (SEPs) and non-standards essential patents, to OEMs rather than less profitable licenses to chip makers. In 2007, Apple and Qualcomm agreed to partner and it was understood that Apple will have to pay US$ 7.50 per handset as royalty for using Qualcomm’s modem (and indirectly patents).
  • Apple viewed the US$ 7.50 per handset royalty payment the companies settled on as excessive, Apple had no alternative: “If we didn’t agree, then we would be paying the contract manufacturer rate, which was in the high teens; or if we somehow challenged it, we stood the risk of our brand new iPhone we were working on getting enjoined” Jeff Williams, Apple COO, testified in court.
  • On the other hand, Qualcomm offered Apple lower patent royalties if the iPhone exclusively used Qualcomm chips, locking competitors like Intel out of an incredibly popular phone.
  • Qualcomm used the agreement to discourage any Apple interest in a competing wireless standard, WiMAX, being sponsored by Intel. According to their agreement, Qualcomm’s rebates would end if Apple shipped more than 1000 WiMAX equipped phones. The agreement effectively killed Apple’s interest in pursuing the technology. This was considered a strategic win for Qualcomm since it meant that Apple would opt for a cellular standard that Qualcomm favored called WCDMA. Indirectly, again forcing Apple to depend completely on its patents.
  • Ultimately, the two companies settled the lawsuit internally. As part of the settlement, Apple made a payment to Qualcomm for an undisclosed amount. The companies had reached a six-year global patent licensing agreement, which may be extended for another two years.
  • The point is if a giant like Apple can’t go up against Qualcomm, how will any other Android OEM?

This question is what empowers Qualcomm the most. It knows it has an edge and it’ll do anything to maintain it. The Apple vs Qualcomm case was just one instance. It cornered Intel, attempted a hostile takeover of Broadcom, and constantly tries to have exclusivity deals.

Samsung’s Exynos and HiSilicon’s Kirin series are the closest SoCs in terms of performance and features, but these are primarily reserved for their maker’s own flagships and aren’t rolled off the production line in anything close to enough numbers to meet global demand. Manufacturers are unlikely to buy up expensive chips without a strong indication that OEMs will use their products, while a lack of availability means major releases can’t pick up these chips.

In the end, India today has two 5G enabled phones available, but they can’t leverage its full potential because the country doesn’t have any 5G network yet. And, it won’t be having it for at least a couple of years. The end-user is paying for a new-generation component that’s of absolutely no use to them. Shouldn’t India’s regulators intervene for this anti-competitive practice? 

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