Qualcomm Inc, the world’s biggest handset chip designer, yesterday said it does not only offer single patent-licensing program linked to the Internet of Things (IoT) at the moment — as it does in the mobile phone area — given the greater diversity of IoT applications.
Patent licensing has been a major source of profit for the San Diego, California-based chipmaker, with the business accounting for more than two-thirds of its net profit for the last fiscal year, it said.
The licensing business focuses on the mobile phone area, given that the IoT market is fragmentary, the firm said.
As part of the company’s efforts to facilitate the growth for the IoT industry, Qualcomm announced in September that it is sharing its cellular patented technology through patent licensing agent Avanci to streamline essential patent licensing for certain IoT applications.
“IoT is not just one topic. There are many different areas in IoT. For example: drones, robots, VR [virtual reality] headsets, automobiles,” Raj Talluri, senior vice president of Qualcomm Technologies Inc’s IoT division, told a media briefing in Taipei.
“There are many, many different applications, not just one application like a cell phone. It is very difficult to have one [patent] licensing program,” Talluri said. “We have not announced anything, but in time, we are coming forward.”
Qualcomm in June said that licensing fees for IoT patents would be lower than the charges for patents used in mobile phones, as some IoT devices, such as “smart” meters, do not need to be connected to the Internet all the time.
The royalty terms that Qualcomm mostly uses are based on the company’s negotiations dating back to 1992 with then-industry giants Motorola Inc and AT&T Inc. Since then, Qualcomm has been charging 5 percent of the selling price of a complete device.
Talluri yesterday declined to reveal the number of IoT patents Qualcomm holds.
He said he also could not comment on what the company’s next IoT strategy would be following its acquisition of NXP Semiconductors NV, as the deal is still going through regulatory approval.
NXP has a lot of technologies that are complementary to Qualcomm’s, particularly in the automotive and IoT areas, Talluri said.
NXP has several thousand customers, which would help Qualcomm broaden its customer base, he said.
IoT would be one of three major growth drivers for Qualcomm in the next five years, as many applications and IoT devices will adopt the firm’s application and connectivity processors, Talluri said.
Last year, non-smartphone business made up about 10 percent of Qualcomm’s chip division, the company said.
IHS Markit Inc projects that the number of IoT devices will rise to 30.7 billion in 2020 and to 75.4 billion in 2025, compared with 15.4 billion last year.
Mobile phones will continue to be the biggest part of Qualcomm’s business, with worldwide sales to continue growing in new markets such as China, India and Southeast Asia, Talluri said.
Automobiles will also be an important growth driver for Qualcomm, as cars are getting “smarter,” Talluri said.
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