Qualcomm's US$12 Billion China Deal Shines Amid Trump's Visit

On November 9, U.S. President Donald trump signed a $250 billion deal with Chinese President Xi Jinping in Beijing. As President Trump has been urging China to improve its trade imbalance, the bulk of the orders are for Chinese companies to expand their investments in the U.S. and buy a lot of U.S. products. As a result, China has delivered a willingness to reduce its trade deficit, one of those multi billion deals made during the day included a US$12 Billion worth deal between the world’s largest smartphone chipset company Qualcomm from USA and the fast growing Chinese smartphone brands Xiaomi, OPPO and vivo.

With the deal which is though non-binding, Qualcomm and these upstart Chinese smartphone brands signed a Memorandum of Understanding (MoU) to sell US$12 billion worth components over the period of three years. This deal comes at a very interesting time when Qualcomm has been facing series of legal battle with one of its biggest customer Apple and other trade bodies over the IP royalty rates which has hurt Qualcomm’s stock and market cap attracting other semiconductor companies like Broadcom for an acquisition bid for Qualcomm. Following are some of our key observations and takeaways from the deal:

  • Risen from business background, Trump and the administration he selected tend to emphasize highly on development of economy rather than other issues in the nation. Evidently main purpose of Trump’s trip is to ease the long-standing trade deficits with China. U.S. corporate delegates joining Trump’s trip have successfully managed to get billions of dollar contracts from China while China barely earned any from the U.S.
  • This shows China has delivered a willingness to reduce the trade deficit in exchange for technological support and other instances of trade cooperation
  • Major Chinese smartphone vendors including OPPO, VIVO and Xiaomi are rising significantly in global market, with their position secured at top ten in 2017 (see here).

Exhibit 1: Top Six Smartphone Brands Globally – Q3 2017

Source: Global Quarterly Smartphone Monitor

  • Many of these top smartphone brands who have been growing scale in countries like China (see here) and India (see here) have ramped up their procurement budgets in order to expand beyond these two key markets into parts of Asia (see here), Europe, Latin America and Middle East Africa
  • Unlike Huawei (see here), Samsung and Apple (see here) who have successfully developed its in-house chipsets to power their portfolio and are less dependent on Qualcomm, other Chinese vendors still rely heavily on Qualcomm’s Snapdragon for flagship / higher-end and now even mid-tier models.
  • With lack of R&D capability in chipset development,  signing of the MoU or not, OPPO, VIVO and Xiaomi are expected to purchase similar value-worth products from Qualcomm over the next three years.
  • This publicly announced deal which has made into global news cycle, will help these brands boost their global mindshare by attracting eyeballs and enhance brand image partnering with market leaders such as Qualcomm
  • This deal will help Qualcomm secure a decent chunk of smartphone market as these three brands are estimated to ship a combined of more than 300 million smartphones every year and almost a billion smartphones over the span of next three years.
  • Further, this deal spans beyond smartphones into area such as IoT incorporating NB-IoT (see here)/ eMTC / Gigabit LTE / 5G capabilities which is a plus for Qualcomm
  • While this news has not moved the Qualcomm stock significantly as in long-term it is a given except for Huawei, Samsung and Apple most of them will be dependent on either Qualcomm, MediaTek and Spreadtrum but it still gives the San Diego based semiconductor company some assurance in banking of these key vendors in near- to mid-term.
  • Further, it will be interesting to see if Qualcomm can also secure similar marquee deals with key design houses, ODMs and other long tail OEMs and smartphone brands.
  • Though all eyes will also be on Qualcomm’s licensing business in wake of these impactful deals and the significant traction Qualcomm is now enjoying in China after the  settlement resolution with China’s NDRC (see here) and if these will have any impact on current lawsuit with Apple
  • So, in summary, both Chinese and US companies benefit from this deal to advance market share with technology partnership


Counterpoint research is a young and fast growing research firm covering analysis of the tech industry. Coverage areas are connected devices, digital consumer goods, software & applications and other adjacent topics. We provide syndicated research reports as well as tailored. Our seminars and workshops for companies and institutions are popular and available on demand. Consulting and customized work on the above topics is provided for high precision projects.

Term of Use and Privacy Policy

Counterpoint Technology Market Research Limited


In order to access Counterpoint Technology Market Research Limited (Company or We hereafter) Web sites, you may be asked to complete a registration form. You are required to provide contact information which is used to enhance the user experience and determine whether you are a paid subscriber or not.
Personal Information When you register on we ask you for personal information. We use this information to provide you with the best advice and highest-quality service as well as with offers that we think are relevant to you. We may also contact you regarding a Web site problem or other customer service-related issues. We do not sell, share or rent personal information about you collected on Company Web sites.

How to unsubscribe and Termination

You may request to terminate your account or unsubscribe to any email subscriptions or mailing lists at any time. In accessing and using this Website, User agrees to comply with all applicable laws and agrees not to take any action that would compromise the security or viability of this Website. The Company may terminate User’s access to this Website at any time for any reason. The terms hereunder regarding Accuracy of Information and Third Party Rights shall survive termination.

Website Content and Copyright

This Website is the property of Counterpoint and is protected by international copyright law and conventions. We grant users the right to access and use the Website, so long as such use is for internal information purposes, and User does not alter, copy, disseminate, redistribute or republish any content or feature of this Website. User acknowledges that access to and use of this Website is subject to these TERMS OF USE and any expanded access or use must be approved in writing by the Company.
– Passwords are for user’s individual use
– Passwords may not be shared with others
– Users may not store documents in shared folders.
– Users may not redistribute documents to non-users unless otherwise stated in their contract terms.

Changes or Updates to the Website

The Company reserves the right to change, update or discontinue any aspect of this Website at any time without notice. Your continued use of the Website after any such change constitutes your agreement to these TERMS OF USE, as modified.
Accuracy of Information: While the information contained on this Website has been obtained from sources believed to be reliable, We disclaims all warranties as to the accuracy, completeness or adequacy of such information. User assumes sole responsibility for the use it makes of this Website to achieve his/her intended results.

Third Party Links: This Website may contain links to other third party websites, which are provided as additional resources for the convenience of Users. We do not endorse, sponsor or accept any responsibility for these third party websites, User agrees to direct any concerns relating to these third party websites to the relevant website administrator.

Cookies and Tracking

We may monitor how you use our Web sites. It is used solely for purposes of enabling us to provide you with a personalized Web site experience.
This data may also be used in the aggregate, to identify appropriate product offerings and subscription plans.
Cookies may be set in order to identify you and determine your access privileges. Cookies are simply identifiers. You have the ability to delete cookie files from your hard disk drive.