R&D spending accounts for 33% of revenue, and the semiconductor giant is ready for 5G

A few days ago, market research firm IC Insights released a survey report on R&D expenditures of global semiconductor companies. According to the report, global semiconductor R&D expenditure in 2016 increased by 1% from 2015, reaching US$56.5 billion, a record high. Among them, Qualcomm's investment is the most eye-catching. In 2016, Qualcomm's R&D spending was $5.109 billion, the most invested in all Fabless. What is even more shocking to the author is that Qualcomm's R&D expenditures accounted for 33.1% of its current year's revenue, which is the highest proportion among the top ten semiconductor R&D expenditures in the world.

In fact, since its establishment in 1985, Qualcomm has invested heavily in research and development. It is precisely because of this that from the evolution of 2G to 4G, we can see Qualcomm technology in almost every communication device. The shadow of the product, Qualcomm has also accumulated profound technical achievements in wireless communication. The patent wall located at Qualcomm headquarters is the testimony of Qualcomm's research and development results.

In recent years, the research and development focus of the communications industry has gradually moved from 4G to 5G, and Qualcomm is also moving forward.

5G value chain will create 3.5 trillion US dollars of output

The fifth generation of mobile communications (also known as 5G), due to its high bandwidth and low latency, has become a hot spot for applications such as driverless cars, Internet of Things, big data and artificial intelligence. Qualcomm is a wireless communication field. The king is no exception. And all of this is valid.

According to market research firm IHS Markit in its recently released "5G Economy" report, 5G will be a catalyst for moving mobile technology into the exclusive field of general technology. According to their predictions, by 2035, 5G will generate 12.3 trillion US dollars of economic output globally. This is almost equivalent to the total expenditure of all US consumers in 2016, and exceeds the total consumption expenditure of China, Japan, Germany, the United Kingdom and France in 2016. The 5G value chain will create $3.5 trillion in output while creating 22 million jobs.

The impact of 5G on the global economy in 2035 (source: IHS)

The huge market capacity is the fundamental concern of 5G, and the convenience hidden behind it is another important factor for the industry to work together to push 5G together.

Nowadays, mobile communication technology has developed from a "people-to-people"-based 3G platform to a global-scale "people and information" 4G connection. 5G will utilize and expand the past research and development and capital investment for mobile technology. Mobile technology has become a unified, low-latency and adaptable platform that can meet future usage needs. 5G will support new cutting-edge applications, promote business innovation and stimulate economic growth.

According to Qualcomm Executive Vice President and QCT President Christiano Amon at the Qualcomm 5G Summit, 5G will be an integrated system based on powerful connectivity technology.

Qualcomm Executive Vice President and QCT President Christiano Amon

It can be said that the emergence of 5G is a pivot point that enables mobile technology to evolve from a technology that has a transformative impact on personal communications to a truly universal technology, and is expected to change the entire industry and economy. When it comes to actual application areas, 5G's target market includes enhanced mobile broadband (EMBB), massive Internet of Things (MIoT) and mission-critical services (MCS).

IHS Markit pointed out in the "5G Economy" report that among the three application directions, the first one should be enhanced mobile broadband, which meets the needs of human-centric multimedia content, services and data access. Meets applications characterized by high user density, ultra high capacity, low mobility, and user data rates above wide area coverage.

After the development of EMBB to a certain stage, MCS and MIOT will become the next focus of attention, including MCS focused autopilot cars, a large number of drone applications, industrial automation, telemedicine and smart grid, and MIoT attention. The high volume of the IoT market with sensors and connectivity. The market here is also limitless.

IHS Markit predicts that global real GDP will grow at an average annual growth rate of 2.9% between 2020 and 2035, with 5G contributing 0.2%. In other words, if 5G is not deployed, the global real GDP growth rate will be 2.7% (that is, the overall GDP growth rate will increase by 7%). From 2020 to 2035, 5G contributed $3 trillion to annual GDP, as shown in the following chart. It is no wonder that governments and companies are investing heavily in such a huge impact on the global economy.

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