Qualcomm Confirms EU Antitrust Probe Of 5G Chips

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Not again. Qualcomm admits it is facing an EU antitrust investigation over sales of its 5G modem chips, as it warns of Coronavirus disruption

Qualcomm has confirmed that the European Union is once again conducting a formal antitrust investigation of it for alleged anti-competitive practices.

The admission came as Qualcomm released its first quarter results for the period ending 31 December. That showed that the San Diego-based firm posted a 13 percent decline in profit to $925m, on revenues up 5 percent at $5bn.

“Our strong fiscal first quarter financial performance reflects a significant inflection point for Qualcomm as we begin to realize the benefits from the ramp of 5G,” said CEO Steve Mollenkopf.

 

Another investigation

But Qualcomm also posted a regulatory filing that said that the European Union is investigating whether Qualcomm engaged in anti-competitive behaviour by utilising its market position in 5G modem chips in the radio frequency chip market.

In December last year, Intel filed a court brief alleging that Qualcomm forced it out of the market for smartphone modems, as part of a “brazen scheme” built on illegal business practices.

Intel’s comments relate to its wireless modem business, which it built up over a decade, investing billions of dollars into the unit only to sell it to Apple earlier in 2019 for a fraction of that amount.

Apple had used Intel modems as an alternative to those of Qualcomm, but in April 2019 the iPad maker agreed to switch to Qualcomm chips as part of a broader intellectual property settlement.

Intel then exited the market in July 2019, selling its modem business to Apple for a mere $1 billion (£770m).

The news that Qualcomm is facing yet another antitrust investigation comes after the company already spent years facing off against regulators around the world.

Qualcomm has previously been forced to pay billions of dollars in settlements over allegations that it engaged in anticompetitive patent licensing practices.

Regulators in South Korea, Taiwan, the EU and China have for example imposed fines on Qualcomm for its business practices.

Qualcomm last year lost a case brought by the US Federal Trade Commission, but that case remains locked in an appeal.

Coronavirus Disruption

Meanwhile the world’s biggest maker of smartphone chips and modems has warned that the coronavirus could disrupt the global mobile industry.

The firm lowered its earnings guidance for next quarter, in part due to the virus outbreak in China.

“There is significant uncertainty around the impact from the coronavirus on handset demand and supply chain,” CFO Akash Palkhiwala warned during the earnings call.

China is in the grips of the deadly outbreak, which so far has killed more than 560 people and infected over 28,000 people worldwide.

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Author: Tom Jowitt
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