Qualcomm is a unique company in that it holds a lot of intellectual property that it largely licenses out to others. Like many companies that make the technology market work, Qualcomm provides part of a solution that its partners complete. Qualcomm generally provides is knowledge that allows a smaller firm to more effectively compete with a much larger firms.
Without Qualcomm, you’d probably have one major smartphone provider (Apple) and a lot of smaller companies providing point products for market segments that Apple doesn’t care about. This was the computer world as it existed prior to the 1980s, only then IBM was in that total-market-dominance spot.
Thanks to Qualcomm, we have a critical mass of competition that forces Apple to moderate its prices and provides better bargains for those of us who aren’t, and don’t want to be, locked into the Apple ecosystem.
But even though Qualcomm has been identified as a National Treasure, it isn’t consulted regarding policy that materially impacts its business and the U.S.’s dominance in the increasingly important mobile communications and computing segment. The U.S. too often appears to be operating tactically to address critical problems, and by doing so, seems to be assuring that China will replace it as the segment leader for mobile technology.
Let’s talk about why the U.S. government should work more closely with Qualcomm this week.
The downside of sanctions and technology blockades
The U.S. is at a very high risk of war with both Russia and China. One of the reasons that Russia is performing so poorly in its war against Ukraine is that, now that it has been sanctioned, it’s having trouble acquiring the technology it needs to build weapons. Had Russia realized this critical dependency existed prior to declaring war, it might have been more willing to take a less deadly route or put off the war altogether. The ability to acquire this technology in the past created a dependency between Russia and the West that limited Russia’s ability to wage war.
In contrast, the technology blockade that has been instituted against China is forcing that country to reverse engineer and recreate U.S. technology China can no longer license. Short term, this causes China significant additional hardship, but long term and strategically, it will make China more able to support itself during a war and more likely to declare one.
Just as important, China would then stop licensing from U.S. firms like Qualcomm and compete with the company instead. Given the integration of the Chinese government into Chinese companies, the result might not only be significantly cheaper but compromise global security. That result would harm Qualcomm and other U.S. domestic tech companies, as well as significantly accelerate the displacement of the U.S. as the world’s technology leader.
Dependencies help prevent wars by creating logistical roadblocks that automatically kick in when war is declared. Eliminating these dependencies, as the U.S. is forcing China to do, makes war and Chinese competitive inroads against U.S. companies much more likely.
Wrapping up: The collaborative approach
I’m not advocating that Qualcomm decide foreign policy. That is the U.S. State Department’s job. What I am suggesting is that Qualcomm be consulted so that the unintended consequences and collateral damage of government decisions can be considered prior to the decisions being made. The U.S. has lost leadership in much of the transportation and consumer electronics industries and appears to have lost leadership in the automotive market and manufacturing in general.
Assuring that other market leadership positions aren’t lost accidentally should be part of the State Department’s remit, yet, without collaborating with the companies affected by these decisions, the government is more likely to kill the segment than assure U.S. success in it.
In the end, without collaboration, it continues to be more likely the U.S. will create bigger future problems through its actions rather than eliminate them. These are problems that could have been avoided had government consulted with U.S. firms impacted by the related decision.
In short, the U.S. has massive knowledge resources that could mitigate or avoid painful mistakes entirely. Using these resources would be a much better way to avoid a negative outcome and blame that on someone else which too often seems to be the preferred practice.
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