Broadcom withdraws from mobile phone chip business: not grounded

US chipmaker Broadcom announced on Monday that it will abandon its mobile phone baseband chip business. The iPhone and some other high-end mobile devices use Broadcom and Bluetooth integrated chips from Broadcom. However, the low-to-medium business smartphone chip market was seized by MediaTek, and the 4G market was dominated by Qualcomm. It is very difficult for Broadcom to find buyers.

The author asked a few friends in the industry, they think that Broadcom's exit from the mobile phone chip business is normal, because Qualcomm is difficult to survive in Broadcom. They have a wireless chip business, and cutting down the mobile phone chip department has saved hundreds of millions of dollars.

Qualcomm has seized the opportunity

At the beginning, Broadcom had a Wireless department that provided wireless data connectivity solutions for network devices. Their slogan is "connect everything", and they do very well in this piece. From routing to mobile multimedia processors, they will use their solutions, including high-end mobile WiFi and Bluetooth chips. Later, they saw the development of mobile phones, set up the Mobile department, and began to do mobile phone chips, mobile phone baseband business.

What Qualcomm did at the beginning was the business of mobile phone chips, and they quickly became the leader in this industry. But Qualcomm also wants to move toward wireless network connectivity, so it is also starting to route chips. When Broadcom started, he wanted to grab business with Qualcomm, but Qualcomm has been in the industry for a long time, and there is no way to gain the trust of manufacturers. In the field of wireless connectivity, Qualcomm is also facing the pressure of Broadcom.

Both companies want to move from the original business to the other side of the field, but because the other side is too strong, there is no way to form their own market. Broadcom's native business is not a mobile phone chip, so it is difficult to compete with Qualcomm.

Broadcom's chips are too expensive

“The quality of Broadcom products is good, and the fees are similar to Qualcomm, but they have different charging models.”

Qualcomm's charging model has two phases. In the first phase, when the chip is provided, the manufacturer must pay the chip fee and the patent fee. Mobile phone manufacturers use Qualcomm's solution to make mobile phones. At the time of shipment, Qualcomm will charge the corresponding license fees. Although this was disguised in the mobile phone Maori, but using Qualcomm's solution, the funds are relatively less tense.

For mobile phone manufacturers, Broadcom is a chip supplier. Its charging method is simple and rude, that is, the cost of the chip and the patent fee. Under the premise of the same quality of the chip, the use of Qualcomm's solution is not so tight, and Qualcomm and Broadcom's charges are similar, mobile phone manufacturers generally choose Qualcomm.

This has caused many mobile phone manufacturers to sharply reduce their interest in Broadcom, which has made Broadcom's mobile phone chip business worse.

Additional problems arising from competition

With fewer people using Broadcom chips, the ecological environment has become very poor. “The ecological environment is not perfect, it is too difficult to be a development group, and the development of grassroots software becomes very difficult”. The ecological environment is not strong enough, and it further makes it difficult for Broadcom's mobile phone chips to find buyers. Broadcom itself is not willing to let itself compete with MTK, so in the eyes of outsiders, Broadcom has the feeling of "not high, not low."

In addition, Broadcom is also under tremendous pressure from shareholders. "Broadcom's mobile phone business has lost a lot of money. Cutting down this department can save 700 million US dollars every year. It has not improved for so many years. Now the exit may be under pressure from shareholders." Broadcom announced the abandonment of mobile phone chips. At the time of business, its share price has risen by more than 13%.

to sum up

When Broadcom started doing mobile phone chip business, it wanted to compete with Qualcomm and was unwilling to let go of MTG and MTK all the way. Therefore, people in the industry feel that Broadcom is "not grounded." Some people say that China's mobile phone manufacturing industry is relatively dark, but some manufacturers have responded: "Don't say black or not, why can Qualcomm do it, and Broadcom can't do it?"

Of course, the mobile phone chip business is a piece of rotten meat for Broadcom, and it will continue to affect the original business. Broadcom can also live very well by relying on wireless solutions, so exiting the mobile phone chip business is also a good thing for the company.

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