The 5G mobile communications standard is also driving the business of the Munich Qualcomm division.
(Photo: Reuters)
Munich There have been no chimneys smoking in Munich’s Werksviertel for a long time. The industrial site has been transformed into a party zone, a destination for excursions and an office district. Ironically, one of the largest chip companies in the world still manufactures on the edge of the area behind the Ostbahnhof: Qualcomm.
An electronics factory in the middle of a big city is extraordinary in itself. For Qualcomm, however, it is downright a sensation, because the world’s top-selling supplier of mobile phone chips obtains almost all of its goods from contract manufacturers.
But the division to which the plant belongs is also out of the ordinary at Qualcomm: Radio Frequency Front-End, or RFFE for short, is the only division of the US company that is not based in America – but in Munich.
A special path that pays off for Qualcomm: In the past fiscal year, the division’s sales shot up by 76 percent to almost 4.2 billion dollars (4 billion euros), which corresponds to around twelve percent of group revenues. It was the San Diego firm’s fastest growing business.
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“For us, design and technology go hand in hand,” says Division Manager Christian Block. Therefore, after Qualcomm took over the business two and a half years ago, he fought vehemently internally to keep the factory – and also the other two factories in Singapore and China. Of the 5,000 employees in the division, 1,400 work in Munich.
Qualcomm is known for its processors, the brains of smartphones. They are marketed under the brand name “Snapdragon” and produced by contract manufacturers such as Samsung or TSMC in the Far East. In this way, the company saves investments in plants worth billions, such as Intel has to manage as a fully integrated provider. In addition, the group recently made headlines as a chip supplier for the auto industry and won VW and BMW as customers for automated driving.
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The Munich-based company, on the other hand, is responsible for high-frequency filters. The components filter the radio signals of the various frequency bands in mobile communications, with which the telephones receive and send information. It can be compared a little with the radios of the past, where the transmitters had to be separated. With the new 5G mobile communications standard, the technology has become even more complex, according to Division Head Block.
The roots go back to Siemens
What sets Qualcomm apart is the complete RFFE solutions on just one chip, enabling a signal chain from the modem to the antenna. Qualcomm sees itself as the only manufacturer of such highly integrated components with a market share of 20 percent for high-frequency filters in mobile communications. “The performance of the filters is highly relevant for the entire system,” explains Block.
It is no coincidence that the shop is located in the heart of the Bavarian capital. The roots go back to the Munich electrical specialists Siemens. In 1999, the Dax group initially listed the area on the stock exchange under the name Epcos, later TDK got involved. The Japanese initially created a joint venture with Qualcomm in 2016, and finally sold their part to the Americans in autumn 2019.
Components from the Munich company are found in practically all mobile phones with the Android operating system, from Google to Samsung to Xiaomi, and also in Apple’s iPhones.
CEO Cristiano Amon promised investors strong growth in the Munich division at last year’s investor day. The manager announced that sales would increase at least as much as the market by 2024, which means: no less than twelve percent plus every year.
This would bring the business to almost six billion dollars in sales in two years. The market, on the other hand, is expected to grow from $17 billion last year to $24 billion. The best-known competitors in this field are the American groups Broadcom, Skyworks and Qorvo as well as Murata from Japan.
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So far, cell phone manufacturers have accounted for the vast majority of the division’s revenues. At Qualcomm, however, they assume that in two years three out of four new cars will be connected to the Internet – and thus become mobile smartphones. This opens up enormous sales potential for the entire group, but also for Munich-based RFFE.
“However, higher demands are also placed on the components in the car,” says Division Manager Block. According to documents for investors, the division could generate sales of up to $30 for each vehicle with components for a 5G mobile connection. Double-digit growth rates should therefore also be guaranteed for the next few years – and the preservation of the unique factory in Munich.
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