 Good day fellow investors. Today we will discuss Qualcomm. It's a very interesting stock. It's intriguing because the stock price really exploded since they settled with Apple. And I'm here with Yao Kai, who is in China working on his startup, but still he has the time to share his thoughts on the company and on what's going on. I made an analysis on Qualcomm in the past and it discussed how it was a risky investment because from a retail perspective, retail investor perspective, I couldn't know who will win the game of the settlements, of the licensees, of the trade commission investigations, etc. So I put it as risky and I put it into the too difficult to assess basket and certainly not the value investment. Now with more clarity, unfortunately with the stock much higher, let's see whether it's still an investment too difficult to comprehend or it is, let's say, more clarity gives more certainty and gives more an indication of what to do. Hi fellow investors. So this is Yao Kai and in my mind I really had no doubt whether Intel and, sorry, not Intel, Apple and Qualcomm would settle because what are the alternatives for Apple? They could either not release a 5G phone, which will make them a market laggard, which is not something they want to do, or they could settle because this is the only shop. They could also buy from a lesser chip maker. For example, they can get a Huawei modem, which they probably don't want to, or an Intel. An Intel one is still much worse than the equivalent Qualcomm one. So yeah, I think that wasn't a surprise to me. I wasn't expecting the thing to the share price to the spike at that because I thought that was kind of obvious that Apple would need a Qualcomm modem, but it wasn't apparent to everybody else. So Qualcomm really is just two businesses. One is the patenting business and the other one is the chip business. I haven't looked into the patenting business, but I really love their chip business. So I looked at a lot of comparisons between Qualcomm chips, Qualcomm modems and SOCs versus someone else. One of the comparisons that was most convincing was between a Samsung Galaxy S9 using a Samsung chip versus the same phone with a Qualcomm chip. And when you see that, I think Sven will put up a link to that Anantek article. Essentially, by going with Qualcomm, your battery life goes from 9 hours to 11 hours-ish, and then your performance actually goes up by 20% or something. So imagine yourself with a phone that has 9 hours battery life, now I say, oh, by switching to this new chip, you're going to get a two-hour bump in your battery life. And that chip is, I don't know, $20 more or $30 more. Are you willing to pay for it? Yeah, you're willing to pay for it. And even if I say, okay, for a phone that's $500 or $700, now it's $750, but it has two hours more battery life. You'll be like, yeah, I'll take that because it makes your life that much better. And on the other side of battery is usually performance, because usually it's a trade-off. But for that comparison, you will see that the Qualcomm chips actually outperforms in terms of raw performance to Samsung as well. So in gaming, your frame per second was something like 20% higher for the Qualcomm chip versus the Samsung chip. And you feel that, especially if you're just on the edge of the game being smooth. People think game being smooth, after 60 frames per second, you don't feel it that much. But at 40, 50, your borderline smooth, and take 20% off that, suddenly you find the game lagging, and that's not a good experience. And you don't want, if you're paying $700 for a phone, you don't want it to be lagging. And yeah, so that's a reason why almost all the high-end phones use Snapdragon as their SoC and Modem, because it is objectively better and it's detectable by the end consumer. And it's actually a self-reinforcing thing because a high-end phone almost always chooses Snapdragon. And people think Snapdragon is there for that much better, but there's more to a phone than the chip. So by being inside high-end phones, you actually benefit from the other parts of the phone. So the experience of using Snapdragon is just that much better than any other chip. If I tell you there's a MediaTek phone and then there's a Snapdragon phone, you're like, oh, Snapdragon is cool, MediaTek, not so much. So there is some kind of self-reinforcing cycle in that. So when it comes, so we could say that Apple was flexing its muscles and buying time with the lawsuit. So a little bit negotiating typical business doing by Apple. And then on the chips and on the going forward, because it's always important what's going forward, do you see any competition coming out from? Yes, mostly towards Snapdragon. Yeah, so in terms of a role, performance, Snapdragon is really two parts. It's the CPU and the GPU plus the modem. So Apple already makes the CPU and the GPU. And they recently are in the talks to buy Intel's modem division. So they're going to buy Intel's modem things and then Apple is going to do it in-house essentially as they usually do. So Apple also had a lot of inside of like trade secret almost stuff from Qualcomm while they were collaborating. And then the whole lawsuit was basically Apple is leaking these things to Intel. So for Intel to make a better chip and Qualcomm is really unhappy about it. So in this case, Apple itself, given them a few years may come up with something that is actually better than Qualcomm or at least on the same level. But again, they never sell their chips outside. So the competition will just be within iPhone. But again, iPhone is quite a big market share. So it is going to be a hit to Qualcomm down the line. I can see Apple making their own modem probably within three years. And this is also the biggest risk also earlier before the settlement when watching Qualcomm. You never know what's going to happen two or three years down the road. If they wouldn't have settled and Apple was already there, it isn't there. Now we see it. Now we know it. But if it wouldn't have been like this, then the stock could have really been hit and we would see earnings of three dollars per share or something. So it will be always volatile. And it's always a bet on the future technology race, who will prevail, etc. So it's not a value investment. It remains not a value investment. And it remains a high uncertainty investment. Could we say that? Yeah. And then the, I mean, for me, the upside in the next few years is, yeah, Apple's not going to be able to come up with a chip in year and a half. But give them three years, they probably will. But within year and a half, 5G might have already taken off. So everybody's switching their phones with a better chip and everything. So that could drive their earning quite a bit higher if the global smartphone shipment goes up as we have this whole, essentially a generation switch. You need new hardware to support 5G and everybody's going to upgrade their phone. You're going to upgrade cycle. But it's not a sustainable, it's not a thing that once this 5G takes off, you constantly have this demand. No, it's a wave. It will fade. How long it will take? I don't know, maybe three years, maybe shorter. And then, as you said, investors in Qualcomm have to also look into the patent part and how many patents does Qualcomm have for 5G? They had all of them from 3G and then... That's in 4G. And now 5G, I haven't checked myself. But in 3G, they almost were monopoly in terms of patents. They almost hold, like everybody selling every phone had to pay them. And it's not the case for 4G. I mean, I remember there was a lawsuit during the 3G time where the Chinese government got involved because all the Chinese phone makers had to pay so much money to Qualcomm and it was a big fuss. But you don't hear that was 4G. And in 5G, I don't even know if they're ahead in terms of the patents. But given the environment, we could again say that, okay, now Apple is settled. So there is certainty that Qualcomm will get revenues and profits for the next one to probably three years. After that, we don't know. But there still remain the uncertainties. The trade commission is continuing with the investigation. Others will sue them or Qualcomm will sue other people, et cetera, et cetera. So it will be again the same environment going forward. Right. I don't see how it, it's just not, if it's valued at much lower prices, you will get the best chip, mobile chip maker for cheap. Yeah, I'll buy it. It's not that cheap. So I'm not long or short this name. Just for me, it's just an interesting side show. And also very interesting to keep up with how the technology is progressing. But it's not an investment thing that I would not invest in it at the moment. I think we are on the same page there. And then we'll close this one here and we'll announce the second stock that we are going to talk, which is real value investment. And that is Guansheng Railway in China. Yeah. All right. Thank you. And see you tomorrow with Guansheng Railway, which is, let's say, more a value investment and more a stock that we could really get interested in as value investors.