The U.S. Department of Commerce smacked a 7-year ban on ZTE when it was caught breaking terms of an agreement reached last year, plus illegally shipping goods to Iran did not do anything to warrant a favor. However, in the midst of all this, it is going to be Qualcomm that is going to suffer from this aftermath, as a massive portion of ZTE smartphones are incorporated with Snapdragon SoCs. A series of statistics reveal how much Qualcomm plans on losing in terms of revenue after this setback.
Counterpoint Research Analyst Provides An Estimate - Half a billion Dollars Lost in Revenue for Qualcomm
According to IHS Markit, ZTE sold around 46.4 million phones last year. Reuters has reported that Neil Shah, research director at Counterpoint Research states the following on how much Qualcomm could potentially be losing out on.
“If you look at ZTE it sells around 45 million smartphones per year globally, and almost half of them have Qualcomm chips. So if you look at an average of 25 dollars per chip set that’s close to half a billion dollars in revenue.”
Canalys, a technology consultancy group believes that 65 percent of ZTE phones contain Qualcomm chips. Loss of revenue is just going to be the start of bad things to come. As threats of tariffs and trade barriers start to materialize, Qualcomm is going to be caught in the crossfire.
Qualcomm is also tied to the U.S. government in terms of defense contracts and it is also juggling regulator approval in China for a $44 billion takeover of NXP Semiconductors. ZTE can always switch to other SoC manufacturers but at this stage, there is only MediaTek. MediaTek has not released a Snapdragon 845 competitor and we do not believe that it will plan on releasing a Snapdragon 855 rival as well.
What the fabless semiconductor manufacturer plans on doing is target the mid-range market, but that will mean that if ZTE chooses these chipsets, it will not command as much performance as the high-end Snapdragon silicon.
Huawei is also ramping up its HiSilicon chip business so it means that it will be relying less on Qualcomm, resulting in a further loss for the chipmaker. Where do you think the end of the road lies for the U.S. company? Tell us down in the comments.
News Source: Reuters
