Qualcomm Facing Up To $1 Billion Chinese Antitrust Fine

Mobile chipmaker Qualcomm is preparing a record-breaking settlement which it hopes will end an antitrust investigation into its activities in China.

The company has been engaged in talks with regulators for 14 months as they look to examine whether Qualcomm’s licensing arm behaved properly when dealing with Chinese licensees of its technology.

The company reportedly charged higher prices to Chinese companies than in other countries.

Slapped wrist

“The NDRC will soon release a new antitrust settlement,” Xu Kunlin, the head of the antitrust division at the National Development and Reform Commission (NDRC), said at a law conference on Monday, according to an article posted on the website of the official Securities Times. “Qualcomm will be fined several times the total amount the NDRC fined last year.”

The probe found that Qualcomm earned about half its global revenue for the fiscal year ended September 28 (around $26.5 billion) in China, with a large chunk of profit coming from higher-margin royalties earned from the company’s licensing arm.

The $1 billion fine is only part of the deal, which may also see Qualcomm lower its royalty rates by around a third on patents used in China, a source told Reuters.

If confirmed, Qualcomm’s fine would be the largest paid by any company in China. The company would also agree to make changes to its licensing practices, though those are not expected to alter its business model.

Final shot?

Qualcomm will be hoping for a successful resolution of the dispute, which is the latest of several to dog the company throughout its rise to the top of the pile.

Last year, it also faced an investigation in Europe following a complaint from broadband chip-maker Icera, which accused Qualcomm of anti-competitive behaviour.

In 2010, the EU competition authority apparently halted a four-year probe into Qualcomm after Ericsson and Texas Instruments withdrew their objections.

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