Qualcomm Charges China Mobile TD 高通TD芯片面世将照亮中移动业务前景

This may look like something only a techie can appreciate, but the recent start of production by leading global chipmaker Qualcomm (Nasdaq: QCOM) for cellphone chips using a homegrown Chinese technology looks set to provide a major boost to dominant Chinese telco China Mobile (HKEx; 941; NYSE: CHL). This latest development comes as big and important news for TD, the homegrown technology being used by China Mobile in its 3G and 4G networks.

The fact that TD is a new technology that is mostly limited to China has led most big global cellphone makers to put only limited resources into new product development for the standard. As a result, only a few high quality TD smartphones and other products are now in the market, and the sector instead is dominated by mostly smaller niche players, limiting the appeal of China Mobile’s 3G network.

Apple (Nasdaq: AAPL) has indicated in the past it would like to make a TD-based version of its popular iPhone, but has refrained up until now due to a lack of availability of a high-quality, high-performance chip for the product. Now that I’ve given all that background, let’s get to the latest news, which has media reporting that Qualcomm’s TD chips have finally entered the market, fulfilling the company’s most recent pledge to roll out the product by year-end.

According to the reports, 40 percent of models selected by China Mobile in its latest tender for TD handsets were powered by the new Qualcomm chips — a huge market share for a product that was only recently introduced. (English article) The reports say that among the 30 handsets chosen by China Mobile in the recent tender, 12 used Qualcomm chips as their core processors. The remaining orders went to models powered by chips from other smaller developers like Sequans, Spreadtrum (Nasdaq: SPRD) and Marvell (Nasdaq: MRVL).

Qualcomm rose to prominence as one of the world’s top mobile phone chip makers, and has seen its business soar as smartphones quickly muscle their way into a space once dominated by more traditional desktop and laptop computers. Reflecting that fact, Qualcomm recently overtook traditional PC chip leader Intel (Nasdaq: INTC) in market capitalization to become the world’s largest chipmaker.

So, let’s return to the news of Qualcomm’s entry to the TD market, and what it means for China Mobile. For Apple lovers, introduction of Qualcomm TD chips mean we could soon see an iPhone that can run on China Mobile’s high-speed data networks. (previous post) But I would add that recent signals from China Mobile indicate it may prefer to skip an iPhone for its current 3G service and instead wait to introduce an iPhone for its 4G network, which is under construction now and could enter commercial service by the end of next year.

From a broader perspective, Qualcomm’s entry to the market means that many of the world’s top mobile phone makers, including Samsung (Seoul: 005930) and HTC (Taipei: 2498), may soon put significantly more resources into developing a bigger range of high-performance TD smartphones. That could provide a huge boost for China Mobile, since the lack of high-quality TD cellphones has been one of the biggest factors limiting its ability to promote its current 3G network.

As a result, China Mobile has lost steady market share in the 3G market to rivals China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA), which use globally developed technologies in their networks. I previously predicted that 2013 could be the year that TD technology finally gains global acceptance, partly due to anticipation that Qualcomm’s chips would soon enter the market. (previous post) Now that Qualcomm’s chips have finally arrived, that prediction could be one step closer to becoming a reality.

Bottom line: Qualcomm’s roll-out and the rapid adoption of new cellphone chips based on TD technology should give China Mobile’s 3G and 4G networks a big boost in 2013.

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