How Much are Cell Phone Royalties Really
This past month has seen quite an increase in news about complaints about overseas royalty payments, particularly the ones paid by Korean telecom operations:1. A Dong-A artcile bemoaning the general royalty imbalance between Korea and the world. The Korean Electronic Association estimates "Patent-related expenditures of Korean flagship companies such as cell phone, MP3 player, monitor, and set-top box makers rose from $163 million in 2001 to $280 million last year."
This last one got me, one would think that from these articles that these big foreign compaines are robbing Korean handset makers blind. However consider this article on Qualcomm in Forbes in November '05. The article includes a graphic spelling out the costs of making a basic handset:
Thats right we are only taking about 7% of the total costs. Meanwhile Samsung reports a gross margin on their handsets world wide of around 15% (it varies quarter to quarter). Yeah, Qualcomm is really bleeding this industry dry.
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