from Hacker News

The Secret Behind Qualcomm's Margins? Patents

by ejz on 12/11/23, 10:43 PM with 116 comments

by FredPret on 12/11/23, 11:46 PM
Qualcomm does have a nice margin (20%) [https://valustox.com/QCOM] but this is roughly in line with other big co's in the industry.
Motorola makes 18% [https://valustox.com/MSI]
Broadcom, Nvidia, and even Texas Instruments are around 40%! [https://valustox.com/AVGO, https://valustox.com/NVDA, https://valustox.com/TXN].
Intel and AMD bring up the rear with 1.8% and 0.5%. [https://valustox.com/INTC, https://valustox.com/AMD]
For reference, Apple is at 25% and Tesla is at 11%. https://valustox.com/AAPL, https://valustox.com/TSLA]
by mschuster91 on 12/11/23, 11:41 PM
> Qualcomm’s licensing business is best-in-class and an example many companies can learn from.
The last thing this world needs is more Qualcomm. I'd rather see the entire patent system go down in flames than this utter crap continuing.
Qualcomm has been a vampire on technology for years now, it's time for this company to end once and for all. We have to get technology under the people's control again - it is ridiculous and stifling progress that governments legally prescribe standards that are not open to everyone to implement. And especially it's ridiculous how few notable manufacturers of mobile phone SoCs remain - it's either Qualcomm or Mediatek.
by jauntywundrkind on 12/12/23, 1:23 AM
In the west, Qualcomm won. There's basically no one else even trying to make medium or high end chips. The patent encumbrance seems total.
Even the mega giant Apple is reportedly just giving up on trying. And at huge real world impact, as well as market drive. Apple designs tend to use a third or more of their phone motherboard's real estate supporting Qualcomm's forest of different parts required for cellular. It's been stubbornly hard to integrate well, forever.
The other IT field I'd cite is GPUs, where it's not at all a secret that companies would love to make more open hardware & stop using so many firmware blobs, but those blobs are the obfuscation layer that gets them legal protection, by making it unclear how the hardware works.
In these regards, it's just a miracle wifi and bluetooth and consumer GPUs exist. That anyone can build any chips, given our shitty onerous forsaken legal IP system, seems like a miracle. Qualcomm feels like the dark world hell nightmare we can never escape from but miraculously nightmare-shit-world is in only one key part of information technology, not all of IT. Somehow. Thank the stars.
by greatpostman on 12/12/23, 12:45 AM
It’s kind of an untold story, but I grew up near San Diego. My dad knew a bunch of early Qualcomm employees (in the first 50). Many of them had most of their equity clawed back through unethical legal agreements
by kazinator on 12/12/23, 12:07 AM
Patents, inscrutable tools for working with low-level firmware, and a completely separate kernel line for each SoC based on an old kernel not even remotely upstreamed, ...
by amadeuspagel on 12/12/23, 1:17 PM
The chip is the most important part of a computer, but most chip companies do not capture much of the value created with the computer. An OEM pays about as much for an intel i3 chip as they pay of a windows license, and intel actually has to produce the chip.
This is why Apple has been so successful with Apple Silicon: Apple is able to capture way more of the value created with Apple devices, which is why they're able to invest more in chips then Intel/AMD and yes, even Qualcomm.
by croemer on 12/12/23, 2:35 AM
Oh, is Qualcomm the reason why adding cellular to an iPad is so expensive? I never understood how such a relatively small feature would cost that much. The alternative is that Apple just makes more money when setting prices like that. Would be curious how much of the price difference is extra license fees for Qualcomm.
by whynot-123 on 12/11/23, 11:42 PM
I question who this article is for - having worked at Qualcomm, they beat you over the head on how their business is built on patents and how they were going to go belly up some 20 years ago had they not pivoted to this model. I can't imagine a single analyst or anyone interested in the company not aware of their business model in the same way it doesn't take long to figure out that Apple is in the business of selling iPhones, mac books, etc.
by contingencies on 12/12/23, 2:04 AM
IANAL but the patent system seems to be based upon outmoded thinking that a theoretical monopoly: (A) can be established (B) can be practically guaranteed or enforced by a single government authority (C) is a desirable 'deal' for the inventors vs. the nontrivial fees, disclosures and temporal inputs required on their part. Essentially the inventor is asked to invest in the commercialization of their idea before the viability is known. This greatly favors larger corporations as it is a resource vs. risk question.
In fact you need deep pockets to litigate, and you get ~zero protection until that is done save threatening C&D letters. Most patents are garbage (eg. clear prior art exists, they are obvious and non-inventive, or they are poorly structured and easily sidestepped - but make the governments and lawyers money) and most alleged infractions are settled out of court (possibly largely because most patents are garbage, but invalidating their claims in court costs too much money).
In the recent words of a prominent university law professor, "IP law is the field of law in which I have witnessed the most inconsistent results during my career" ... ie. great firms sometimes yield crap results, and crap firms sometimes yield great results - it's a relative shit show.
In an ideal world it would be great to see either a deconstructed patent system or a revised patent system with lower fees, more boolean logic, less jurisdiction-specific human language verbiage, and a more structured character to the claims and description text. Realistically, that isn't going to happen because vast investments in the status quo exist.
(Source: Spoke with four IP law firms across two countries and some prominent law professors in the last month, currently spending ~100% time on patent theory, drafting and review - 'tis the season to be lawyery!)
by mushufasa on 12/11/23, 11:38 PM
This is the patent system working as intended. Protection for technology development.
You may say it limits innovation. But it also protects smaller players from investing in innovation, by de-risking that a big customer might copy them and destroy their business. Which is mostly this scenario.
I think the bigger problem with the patent system is the patent trolls. Please someone solve that problem.
by levi_n on 12/12/23, 12:31 PM
When I worked at Qualcomm the inside joke was that Qualcomm is really a law firm that also employs several thousand engineers.
by zoobab on 12/12/23, 4:24 PM
Qualcomm is a very aggressive proponent of software patents.
by sportstuff on 12/12/23, 2:41 AM
Qualcomm blew it on 5G. The math is so beautiful! It's more than patents.
by shmerl on 12/12/23, 12:57 AM
Qualcomm is a patent troll in some of the worst senses.
by aspenmayer on 12/12/23, 2:14 AM
The amount of heavy lifting that the word “may” is doing in this FUD encoded legalese SEC disclosure is impressive. It also ignores that first order effects reducing profits due to open sourcing may be eclipsed by second order effects in the market possibly selecting for rather than against open source software/firmware/drivers for their products.
> Our use of open source software may harm our business.
> Certain of our software and our suppliers’ software may contain or may be derived from “open source” software, and we have seen, and believe that we will continue to see, customers request that we develop products, including software associated with our integrated circuit products, that incorporate open source software elements and operate in an open source environment, which, under certain open source licenses, may offer accessibility to a portion of our products’ source code and may expose our related intellectual property to adverse licensing conditions. Licensing of such software may impose certain obligations on us if we were to distribute derivative works of that software. For example, these obligations may require us to make source code for the derivative works available to our customers in a manner that allows them to make such source code available to their customers or license such derivative works under a particular type of license that is different than what we customarily use to license our software. Furthermore, in the course of product development, we may make contributions to third-party open source projects that could subject our intellectual property to adverse licensing conditions. For example, to encourage the growth of a software ecosystem that is interoperable with our products, we may need to contribute certain implementations under the open source licensing terms that govern such projects, which may adversely impact our associated intellectual property. Developing open source products, while adequately protecting the intellectual property upon which our licensing programs depends, may prove burdensome and time-consuming under certain circumstances, thereby placing us at a competitive disadvantage, and we may not adequately protect our intellectual property. Also, our use and our customers’ use of open source software may subject our products and our customers’ products to governmental and third-party scrutiny and delays in product certification, which could cause customers to view our products as less desirable than our competitors’ products.
https://investor.qualcomm.com/financial-information/sec-fili...
https://web.archive.org/web/20230921012336/https://investor....
by AlbertCory on 12/12/23, 12:38 AM
If you're serious about "reforming" software and standards patents, you should first carve off that area from pharma and bio patents. Make software just plain not patentable.
Why? Strategically, you don't want those drug people as enemies. They have an extremely powerful lobby in D.C. and many "reforms" that make sense in software would get them up in arms. Choose your battles.