The west has held IP leadership in the technology space since the age of the mainframe. In hostile times, that has provided advantages in targeting, secure communications, and significant advantages in manufacturing capacity. Until recently, the West’s dominance has been challenged in some areas like consumer electronics which Japan took over, and automotive where Asia has been steadily eclipsing the West. Particularly troubling has been the erosion of manufacturing capacity which is currently contributing significantly to the shortages caused by the pandemic and Russia/Ukraine conflict.
But with the latest technological move to the cloud, which again puts communications technologies on the critical path, China is moving aggressively to own the related standards and to use its authoritarian government to eventually dominate communications technology. Right now, 5G is secure thanks to Qualcomm but, unless something changes, 6G could be owned by China, creating potentially massive security and communications problems for the West and particularly the U.S.
China’s government understands better than most Western governments that communications technology, or more accurately the control over it, could well define future battlefields regardless of whether the battles are fought with weapons or through the control and monitoring of communications.
The West and particularly the U.S. are falling behind China
As we have moved between the distinct phases of development in the technology market, interest and focus have shifted rather significantly. Initially, it was all about the mainframe. Everything was a service. Thanks to IBM, the west dominated with both hardware and software supplying significant advantages in terms of education and efficiency. Then we moved to PC computing, and while manufacturing moved mostly to Asia, the West held the IP. The next move was to the cloud. While that march was led by companies like Google and Yahoo from the West, Eastern powerhouses like Tencent and Alibaba have risen to be comparable.
As a result of this rise in power, China can credibly argue they are near parity with the U.S. in terms of cloud technology and, on the communications side, Huawei, with its focus on end-to-end solutions and low-cost cellular tower technology, has become a significant threat to U.S. sales and IP dominance. And China is not exactly the poster child partner for any Western company given its support for Russia’s invasion of Ukraine and a ramp up of its plan to invade Taiwan.
As a result, it has never been more critical that the West, and particularly the U.S., assure that no hostile government gains control over the standards for any widespread communications technology.
Qualcomm’s critical role
Qualcomm is a unique company in that it is more focused on licensing its technology than selling products based on it. Most companies, particularly companies focused on hardware, are not known for licensing and, if they do, they are not particularly good at it.
Licensing is a core competence of Qualcomm’s model, and, by licensing, Qualcomm enables smaller companies all over the world to better compete with large companies like Apple that remain focused on their own proprietary models. This is one of the reasons why Apple tried to cripple Qualcomm a few years back. If Apple could have crippled or killed Qualcomm, it could have wiped out many of Qualcomm’s licensees removing much of the competition Apple currently faces in the market. But at least Apple is a Western company. What if the attack had been from an Eastern company or government and Qualcomm had been unable to defend? Then the West would be looking at a dire situation where the company, and country, that prevailed was potentially able to monitor and change communications globally.
Wrapping up: The war we are not talking about
This is the war we aren’t talking about, the one that is increasingly shifting from 5G to 6G and could represent, if lost, a massive shift in influence and power from the U.S. to China and put the world at a higher risk of not only enabling another war but stacking the deck so the West has a massively increased chance of losing.
China’s government clearly understands the risks and rewards of these moves, but the U.S. and West appear distracted. This distraction increasingly assures a future where China could build on its manufacturing dominance by gaining IP leadership as well, putting the U.S. and the West on their back foot and vulnerable to Chinese aggression. This would not only help assure China’s victory in a conflict but embolden the country to start that conflict.
In short, not only is Qualcomm critical to assuring the security of the world’s communications, but it may also be critical to preventing the next global conflict.
