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The MFP Report: Qualcomm’s Hardcopy Chip Unit Becomes Independent QBit
A Long History
QBit is the former hardcopy chip portion of the embedded print technology business owned by Qualcomm.
Qualcomm inadvertently found itself in the printing business two years ago with its $2.4 billion acquisition of CSR (The MFP Report, Aug 15). CSR had owned a relatively small imaging business that was active in two areas of the hardcopy market. Specifically, the group developed embedded software — primarily emulations for HP’s PCL and Adobe’s PostScript page description languages (PDLs), plus printer drivers and mobile device rendering software — and it developed a line of system-on-a-chip (SOC) processors that power MFPs and printers. It is the chip portion of the business that now operates as QBit.
The end result was that the print technology business Qualcomm acquired in 2015 was number one or number two in both segments of the hardcopy industry in which it participated, but that is not necessarily saying a lot. Our guess is the whole unit did somewhere between $60 and $80 million in annual revenue in the past couple of years. And the unit was said to have been consistently profitable
The printer SOC engineers Qualcomm laid off last summer began working immediately for what has become QBit, but the managing director of QBit did not formally exit from Qualcomm until this spring. That explains the delayed public discussion of QBit as a new company. The first order of business for the new company has been to obtain funding. And even now, the QBit web site is still under construction.
QBit has been surprisingly successful finding investors, especially given its relatively small size, and the less than stellar prospects and reputation these days for the printer and MFP market. The company has already received an investment from Taiwan-based New Kinpo Group (NKG), and QBit “is expecting follow-on investment soon from two more strategic partners: a major Japan semiconductor company and a major Japan printer company.”
NKG is an interesting fit for QBit. It is the world’s eighth largest “electronic manufacturing services (EMS) and original design manufacturing (ODM) company.” However, NKG is not nearly as well known as some of its larger competitors, such as Foxconn, Jabil and Flextronics. NKG operates worldwide via several subsidiaries, including Kinpo Electronics, Cal-Comp Electronics, and XYZprinting. Kinpo Electronics and Cal-Comp Electronics provide EMS/ODM services, while XYZprinting manufactures its own branded line of 3D printers for the consumer market.
Assessing QBit’s Future
While QBit is an independent company focused on developing new chips, Qualcomm retains ownership of all the current Quatro SOC parts it acquired with the purchase of CSR in 2015.
QBit has entered into an arrangement with Qualcomm to sell and support the existing Quatro processors, and it says both companies are committed to ensuring there is no disruption for current or new customers using those chips.
In addition, QBit has entered into a license agreement with Qualcomm that enables it to develop new Quatro SOCs. The new chips will be owned, marketed, sold and supported only by QBit. The company presently has 25 engineers in Taipei and 15 engineers at its new office in Littleton, Massachusetts working on new chip designs. And the Japanese chip maker that is expected to invest in QBit shortly will become the manufacturing partner for those new chips.
QBit will be able to sell its own new chips with the PDLs and related imaging software that Qualcomm still owns.
QBit acknowledges it faces a “last man standing” situation in which it and Marvell are the only remaining independent developers of SOCs that power printers and MFPs.
There is both similarity and complementarity between Qualcomm/QBit and Marvell in the printer/MFP SOC market. Both companies base their chips on processor cores licensed from UK-based ARM Holdings, which is owned by Japan’s SoftBank Group. Marvell’s business is focused more narrowly on HP and Lexmark, while the Quatro chips are used by a more diverse group of vendors. And while Marvell alone has a quad-core SOC, both vendors are able to address largely the same kinds of market segments.
Ironically, the Qualcomm imaging unit — and the same unit as part of CSR, Zoran and Oak before that — had always gone out of its way to promote the idea that there were distinct technical and business benefits for hardcopy vendors to source PDLs and SOCs from the same supplier.
Meanwhile, QBit is optimistic NKG’s long-standing business with HP and Lexmark may help it win SOC business in those accounts where it has never gotten much revenue.
Not surprisingly, QBit is also looking down the road beyond printing and imaging. The company says it plans to develop more diverse types of “edge computing SOCs.” Given the nature and growth of the 3D printing market, and the fact that NKG is already in that business, it would also not be surprising to see QBit work on 3D printing SOCs.
Visit The MFP Report website for more articles and information from “the world’s leading newsletter dedicated to providing business intelligence for manufacturers, suppliers and sellers of multifunction peripherals and connected office equipment.”