China Concern Patently Obvious in Broadcom-Qualcomm Rejection

(Bloomberg Gadfly) -- The word China didn't appear once in President Donald Trump's executive order prohibiting Broadcom Ltd.'s takeover of Qualcomm Inc.

It did pop up a lot in the public and private lobbying that led to his sudden decision late Monday. The fear is that China is a rising force, and a merger of the two big telecom firms would undermine U.S. dominance in the industry, especially heading into the next generation of mobile technology known as 5G.

World Intellectual Property Organization data show the U.S. is right to be wary. The numbers from the UN agency also indicate that China's technological ascent probably won't be stopped by one executive order.

To smooth the process of patent applications worldwide, inventors can file for an international grant through the Patent Cooperation Treaty, to which 152 states are signatories -- including the U.S. and China. This type of filing is a little esoteric, but is becoming increasingly important in global markets.

China Concern Patently Obvious in Broadcom-Qualcomm Rejection

While the U.S. leads the world in such applications, the two largest single corporate grant holders are Chinese. And they're both telecom companies.

ZTE Corp. filed for a record 4,123 patents through the PCT in 2016, the latest year for which figures are available, followed by Huawei Technologies Co. at 3,692. Third came Qualcomm, with 2,466. 

China Concern Patently Obvious in Broadcom-Qualcomm Rejection

This situation isn't new. ZTE and Huawei have regularly been among the top three PCT applicants over the past few years. Yet the massive increase in their filings -- they more than doubled in 2016 compared with 2010 -- indicates an aggressive push as the world races toward the next round of technology.

To be clear, patent applications aren't a perfect measure of prowess. The ability to successfully implement technology and win over clients is important, and Qualcomm is a master at that. But China's commitment to taking ground from the U.S. is, well, patently obvious.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

To contact the author of this story: Tim Culpan in Taipei at tculpan1@bloomberg.net.

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