Recently, Qualcomm announced their earnings report, qualcomm achieved double revenue and profit growth in fiscal 2021. Looking at this beautiful financial report, I fell into thinking, because according to my understanding, since the peak of mobile phone shipments in 2016, the global and domestic mobile phone market shipments have basically been in a state of shock and decline, although there are a few quarters in the middle of the rise, but because the mobile phone replacement cycle is relatively long, so this recovery is only a flash in the pan.
Although Qualcomm is a global company, but according to the financial report data, we can clearly see that nearly 60% of the revenue is from China, of which in 2019 was affected by HiSilicon 810, the decline of the Chinese market once led to a decline higher than the global business, but the Chinese mobile phone market since 2016 domestic mobile phone output reached 560 million units, although last year's mobile phone output increased by 1% compared with 2020, reaching 329.3 million units, but it is still only 58.75% compared with 2016. the specific gravity of . That is to say, China's mobile phone market entered the stock game as early as 2017, not only the shipments are getting less and less, but also decreasing year by year.
So mobile phones are selling less and less, but Qualcomm's financial reports are getting more and more beautiful, and behind it has triggered my thinking, why can Qualcomm achieve sustained growth in the five years when the number of mobile phones has declined? Who made Qualcomm? And who is helping Qualcomm cut leeks? First of all, back to the year when the global mobile phone market began to decline in 2017, I remember that Liu Zuohu once sent a Weibo, complaining that the cost of mobile phone components rose faster than Shenzhen house prices. At that time, with the fire of a well-known memory factory in South Korea, due to well-known reasons, the first shot of mobile phone price increase was opened. Related to this fact is that the Redmi 4 and Redmi 4a released in 2016, as well as the Charm Blue Note5, which competed with Redmi at the time, both made an official adjustment to their price in early 2017, rising by 100 to 300 yuan.
According to data from third-party institutions at the time, in the first quarter of 2017, the price of standard storage chips continued to rise, with an average increase of nearly 30%. Boosted by the storage chip business, Samsung became the world's most profitable tech company in 2017. With the beginning of Korean companies, Qualcomm also began to follow quickly. According to the follow-up development, although Qualcomm is not the initial initiator of the mobile phone price increase, it has become the follow-up leader. The 835 processor in 2017 only sold for $65 according to Ray's total revelations, but this price became around $250 on the 2021 Snapdragon 888. And this year, according to the interaction between lenovo's mobile phone business general manager in China on Weibo and other people, the price of Qualcomm's new processor in 2022 may be as high as $315. That said, from 2017 to 2022, the price of Qualcomm processors soared by nearly 500%. What is the concept of $315? At present, the price of the Xiaomi Mi 12 basic version is 3699, and only one Qualcomm processor accounts for about 54% of the price of the mobile phone. If you calculate the hardware cost alone, this proportion may be even higher. To put it simply, you are now buying a mobile phone not to support mobile phone companies, but to send money to Qualcomm inside the mobile phone.
Under the premise that many Android manufacturers in China cannot escape Qualcomm's five finger mountain, this is basically equivalent to buying a Qualcomm processor to send a domestic mobile phone case. The meaning of the mobile phone shell is that if the upstream manufacturers of screens, memory and core hardware are thrown away, our so-called domestic mobile phone companies are almost completely reduced to spare parts packaging factories for upstream companies such as Qualcomm, Samsung and Sony. In order to combat this low-profit situation, domestic mobile phones almost have to make money through built-in ads on mobile phones. Among them, taking Xiaomi as an example, according to Xiaomi's past financial reports, nearly 43% of its net profit is the revenue brought by rice UI advertising.
In order to expand its business, Xiaomi also launched a special platform for mobile advertising, Xiaomi Marketing, and this action made Xiaomi's advertising revenue enter the top ten in the advertising revenue of Chinese Internet companies in 2021. To put it simply, domestic mobile phones have no bargaining power for upstream enterprises at all, so in the face of naked squeezing of the upstream industry chain, they extend their hands to users who trust them, and this is why there are many domestic mobile phone advertisements, and even because too many advertisements will cause the system to stutter. For this status quo, Wang Tao, the founder of DJI, once complained in an interview with the media in 2019 that the current mobile phone industry, he is a layer of Internet skin, which is essentially a small household appliance industry, and even not as high as a company that does air conditioning.
I have a question I would like to ask you, in the past five years, has the wage income growth outperformed the price increase of Qualcomm processors by nearly 500%? And Qualcomm price increase is not linear growth, but there is a turning point, this turning point is the time when HiSilicon was cut off in 2020, I still remember this time, because Qualcomm did three things at that time, one was to rename the 865 processor iteration product to 888, as if to celebrate, the second is the foundry of the chip, from the better process TSMC to the cheaper Samsung III chip, after the foundry cost became cheaper, Qualcomm actually made a sharp price increase on the Snapdragon 888.
Speaking of Snapdragon 888 is a carnival on HiSilicon's corpse, but I didn't expect that Snapdragon 888 would be so bad. The main reason why the Snapdragon processor is very bad, because Samsung Process lags behind TSMC, so it leads to the production of not only high power consumption and huge heat, and the evidence related to this is the flagship model of a well-known manufacturer in China, that last year because of insufficient materials led to the phenomenon of burning out WiFi many times, although burning WiFi also has on other models, but such a large-scale rollover is only that one, so I attribute it to snapdragon 888.
In order to remedy the big hard injury of fever, last summer, including Xiaomi, OV and other mainstream manufacturers of the Snapdragon 888 model for remote casting, once the chip is higher than a certain temperature, it will automatically lock the performance of the processor, so last summer there were users who used the Snapdragon 888 model may have perception and feel that the mobile phone has become a card. As for the power consumption of the Snapdragon 888, we can quote it directly here. The same phone battery, theoretically 888 than the 865 phone uses nearly 30% less time. Based on the fact that this power consumption is overturned, the battery of each new mobile phone last year is basically above 4000 mA, and in order to improve the bad experience caused by power consumption too fast, everyone is desperately stacking charging power, that is, wiping the ass for Qualcomm. As for the third point, according to our common sense, should the 888 dragon chip be cheaper in the case of such a serious overturn? After all, Samsung OEM is cheaper than TSMC, but in fact, Snapdragon 888 is a new product with the largest price increase in Qualcomm's history, such as according to gossip, Snapdragon may be $100 more expensive than 865. Of course, I can't confirm this rumor, after all, the price of mobile phone chips is a trade secret.
However, according to many third-party reports, the price increase of Snapdragon 888 is actually a basic fact, such as an article on Sina pointed out that after the Kirin 9000 became out of print, Qualcomm has monopolized the high-end new product market, which is where the price increase of Snapdragon 888 chips lies.
In the face of price increases, Xiaomi co-founder Lu Weibin also sent a Weibo that this year's chips are too lacking, not lacking, but urgently lacking. The argument that the market lacks zinc cores has covered up Qualcomm's evil means of price increases, giving people the impression that the rise in chips is caused by market supply and demand. Of course, this is a naked lie, an act of cutting leeks, and at the same time, some domestic manufacturers cover up their violent lies for various reasons. Also because the Snapdragon 888 chose Samsung OEM to save costs, it increased prices under the cover of some manufacturers' shortage of goods.
Revenue for the entire fiscal year 2021 increased by 13% compared to 2020, while profit increased by 74% compared to fiscal 2020 to reach $9.043 billion, and Qualcomm's net profit of $9.043 billion was still after abandoning last year's $7.176 billion research and development expenses. If Qualcomm invests a little less in research and development, the net profit can easily break through ten billion US dollars. If you remember the fact that Qualcomm's revenue in the Chinese mobile phone market accounts for nearly 60% of its global revenue, remember that the shipment volume of China's mobile phone market in 2016 was 560 million units, only 320 million in 2021, Qualcomm's profit in 2016 was only $5.7 billion, but in 2021 it was a contradiction of $9 billion, then the truth of Qualcomm cutting leeks was also ruthlessly torn off the disguise. If there is still someone who wants to excuse Qualcomm, I still say that, your salary income outperforms Qualcomm's price increase multiple?
And another fact that is particularly noteworthy is that after entering 2022, Qualcomm actually dares to continue to mess up, using the Samsung OEM Snapdragon 888 without power consumption optimization, and continues to increase prices unscrupulously, as if it does not put the user's complaints about the Snapdragon 888 in the eyes. As an American company whose core profits now come from China, I also sincerely appeal to Qualcomm, hoping that Qualcomm will do its own thing, after all, you forced China's mobile phone brothers to the price of 4,000 yuan at the same time, in the face of Apple's continuous price reduction, how much market can you squander?
I hope that Huawei can break through the blockade and create China's own chips, so that we can have one more choice.