Qual­comm chip­ping in for China's smart tech fu­ture

The Pak Banker - - COMPANIES/BOSS -

If seven out of ten smart­phones sold world­wide last year were as­sem­bled in China, much credit for that should prob­a­bly go to the China arm of US chip­maker Qual­comm. Thanks to its famed pro­ces­sors such as the Snap­dragon, Qual­comm emerged as the world's big­gest chip sup­plier to smart­phone com­pa­nies.

But Frank Meng, 56 years old, the soft-spo­ken chair­man of Qual­comm China, is not an ex­ec­u­tive who will rest con­tent with past achieve­ments. His mind is fo­cused on things fu­tur­is­tic. "I love to deal with chal­lenges," he told re­porters at the first pub­lic event af­ter tak­ing over as chair­man of Qual­comm China in mid-2015.

And, in an ex­clu­sive chat with China Daily, Meng said Qual­comm will step up its in­vest­ments in China. For, the coun­try is en­ter­ing the age of the In­ter­net of Things, which will see bil­lions of com­put­ers, gad­gets, ap­pli­ances, fur­ni­ture, ma­chines and ve­hi­cles in­ter-con­nected in real time via the In­ter­net.

"Well, ' keep in­vest­ing in China' has been a ma­jor strat­egy for us. Qual­comm will work with its Chi­nese part­ners to seize op­por­tu­ni­ties that do not even ex­ist to­day."

By that he means mak­ing su­per­ef­fi­cient chips for, be­sides the In­ter­net of Things, servers and a new class of ve­hi­cles like drones.

Decades of ex­pe­ri­ence in China's in­for­ma­tion tech­nol­ogy in­dus­try, Meng said, helps him to in­stinc­tively sense what the next big thing could be. "New gad­gets such as drones and in­ter-con­nected smart home devices are set to cre­ate ex­cit­ing de­mand just as smart­phones did a few years ago."

Meng is ex­cited that the Chi­nese tech in­dus­try is ready for the new era, which will be marked by "China-cen­tric" and "China-first" op­por­tu­ni­ties. Lo­cal in­no­va­tions in con­sumer elec­tron­ics will drive growth, said Meng.

The tele­com vet­eran loves to com­pare to­day's mar­ket con­di­tions with those that ex­isted a decade back. Af­ter all, past ex­pe­ri­ences un­veil to­mor­row's trends, he said.

"About 30 years ago, Ja­pan used to lead growth of cam­era and other con­sumer elec­tron­ics be­cause of its huge do­mes­tic de­mand. China is at a sim­i­lar flash­point now. The mar­ket can­not just wait for tech­nol­ogy break­throughs im­ported by over­seas com­pa­nies. In­stead, lo­cal play­ers are com­ing up with gi­gan­tic amount of ideas that suit Chi­nese cus­tomers' re­quire­ment." In terms of in­no­va­tion, Qual­comm has al­ways been keep­ing pace with Chi­nese tech firms, Meng said. The US com­pany's lo­cal arm set up a re­search and de­vel­op­ment team in China to sup­port its Chi­nese cus­tomers.

That is one of the high points of his se­cond stint with Qual­comm China. Dur­ing his first stint from 2003 to 2010, he served as Qual­comm China's pres­i­dent, and led the com­pany into ma­jor deals with Chi­nese hard­ware man­u­fac­tur­ers.

Dur­ing that pe­riod, Qual­comm be­came one of the big­gest sup­pli­ers of CDMA chipsets, a main­stream 3G tech­nol­ogy used in China. "Chi­nese ven­dors started to ex­port 3G phones in 2005. We thought it was a great op­por­tu­nity for us to fuel the trend."

Qual­comm of­fered a wider-tiered prod­uct port­fo­lio than Tai­wan-based com­peti­tors such as Me­di­aTek Inc. That helped Chi­nese smart­phone man­u­fac­tur­ers to boost their sales man­i­fold over the last decade, as de­mand for 3G and 4G devices soared. For its part, to re­in­force its com­mit­ment to the China mar­ket, Qual­comm pledged a $150-mil­lion ven­ture in­vest­ment fund, to sup­port Chi­nese star­tups in ar­eas such as In­ter­net, e-com­merce, semi-con­duc­tors and health.

The US com­pany was also one of the ear­li­est in­vestors in Xiaomi.

Around the time Meng re­turned to the com­pany, a Qual­comm af­fil­i­ate formed a joint ven­ture with Semi­con­duc­tor Man­u­fac­tur­ing In­ter­na­tional Corp, the largest chip foundry in China to­gether with Huawei Tech­nolo­gies Co Ltd, a tele­com equip­ment maker, and imec, one of the world's lead­ing nano-elec­tron­ics re­search and de­vel­op­ment cen­ters, to de­velop the next-gen­er­a­tion in­te­grated cir­cuits.

In­dus­try re­search firm IDC said joint ven­tures with lo­cal play­ers could be an ef­fi­cient way for over­seas tech com­pa­nies such as Qual­comm to pen­e­trate the Chi­nese mar­ket fur­ther in com­ing years. To pre­pare for the fu­ture, Meng-led Qual­comm China an­nounced an­other JV in late Jan­uary, this time with South­west China's Guizhou prov­ince, to de­velop and man­u­fac­ture server chips.

Qual­comm took a 45 per­cent stake in the 1.85-bil­lion-yuan ($280mil­lion) joint ven­ture, while the rest was held by the in­vest­ment arm of the Guizhou pro­vin­cial govern­ment.

Xu Shaoshi, head of the Na­tional De­vel­op­ment and Re­form Com­mis­sion, the coun­try's top eco­nomic plan­ner, said cross-bor­der tech­no­log­i­cal in­no­va­tion will play a key role in China's eco­nomic growth. "China wel­comes for­eign in­vest­ment (in the IT sec­tor)," Xu said.

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