Date
20 August 2017
Chinese authorities have alleged that Qualcomm has abused its market-dominant position in mobile phone chip business. Photo: Bloomberg
Chinese authorities have alleged that Qualcomm has abused its market-dominant position in mobile phone chip business. Photo: Bloomberg

Qualcomm edges closer to China anti-monopoly fine

The National Development and Reform Commission (NDRC) has confirmed that chipmaker Qualcomm Inc has violated China’s anti-monopoly law, Securities Times reported Thursday.

The government agency is conducting further investigations into some sales documents in China to decide on the fine to be imposed on the US firm, the report said.

The fine could be lower than the previous estimate of US$1.2 billion, it said.

The anti-monopoly investigation was initiated in November last year as the company is suspected to have abused wireless communication standards and its dominant position in the market. Qualcomm president Derek Aberle since then has visited the NDRC three times to answer questions. His last visit was on July 11.

“The NDRC has put a lot of emphasis on the probe. It has sent 80 investigators and spent a lot of money to investigate Qualcomm and its clients. The authority has sealed a large amount of documents related to the case,” a source close to the NDRC was quoted as saying.

Qualcomm’s business in China falls into two parts — mobile phone chipset shipments and patent licensing. In 2013, the company’s income from mobile phone chipsets and patent licensing totaled US$24.3 billion, with nearly a half contributed by Chinese clients. Patent licensing income contributed 30 percent of its total revenue, but 70 percent of the profit.

About 5 percent of each mobile phone’s cost goes to Qualcomm as a licensing fee. However, industry consensus is that licensing fee generally should account for less than 10 percent of the handset’s sale price, the report noted.

Chinese mobile phone vendors have long been complaining that Qualcomm takes a tough stance in pricing negotiations. With fierce competition in the domestic market, many Chinese cellphone firms have to constantly push their product prices down even as costs change little. Thus, their profits get dented.

Moreover, Qualcomm is said to set much lower patent licensing standards for companies like Samsung and Nokia, compared to what it offers for Chinese mobile phone makers.

– Contact us at [email protected]

MY/JP/RC

EJI Weekly Newsletter

Please click here to unsubscribe