瑞士信贷-美股-技术硬件与电信设备-苹果高通对比-2017.8.4CREDIT SUISSE -IT HW and Telecom Equipment Apple vs. Qualcomm IP Deep Dive

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. 4 August 2017Americas/United StatesEquity ResearchTechnology Hardware & Equipment IT HW and Telecom Equipment COMMENTResearch AnalystsKulbinder Garcha212 325 4795kulbinder.garcha@credit-suisse.comPhilip Wang212 538 3458philip.wang@credit-suisse.comSyed Talha Saleem212 538 1428syedtalha.saleem.2@credit-suisse.comApple vs. Qualcomm IP Deep Dive■Apple-Qualcomm dispute, tied to IP and commercial deals. Following an analysis of legal filings and previous IP disputes, along with feedback from industry experts, we look at the nature of the current dispute. We see merit in both parties’ arguments, and believe mutual self-interest will prevail, making it unlikely that this dispute will result in prolonged litigation or court trials.■Apple needs Qualcomm... First, the current non-paying contract OEMs are under license, and we believe it is unprecedented to withhold payments with an agreement in place. Second, Qualcomm is a key driver of wireless IPR in 2G, 3G and 4G and will be a key contributor to 5G. As a result, Apple products will continue to leverage Qualcomm’s innovations, both for standard essential patents (SEP) and for IP in components, such as battery and screen technology, just to name a few. Third, although Apple may seek to lower its chipset dependence over the long term, we do believe it will require supply over the next few years, especially with the onset of 5G. ■…and Qualcomm needs to resolve this. First, as the largest mobile OEM with hardware revenues of $190bn, Apple is simply too large to ignore. Second, given that Apple is set to gain market share in a non-growing smartphone industry, Qualcomm will be eager to settle this matter. A lack of exposure for Qualcomm means a declining TAM over the next few years. Third, taking this to trial could result in an outcome that affects Qualcomm’s other agreements. The recent Lexmark ruling could also, if applied in this case, represent a risk.■Mutual self-interest will prevail, settlement is possible. We believe, as in the agreements between Qualcomm—Nokia and Qualcomm—Samsung in 2008 and 2009, that an amenable settlement for both parties is possible. This would likely result in a major upfront payment and a heavily discounted royalty rate. It would also likely leave open the possibility of these companies collaborating in other areas, such as digital health, IoT, datacenters, etc. Apple could digest a payment given its cash balances and would welcome a minimal hit to its GM, while Qualcomm would welc