Qualcomm to Pay $975M in China Antitrust Spat

Chipmaker has reached the end of a 14-month quarrel with China's National Development and Reform Commission over anti-monopoly violations.

Sarah Thomas, Director, Women in Comms

February 9, 2015

3 Min Read
Qualcomm to Pay $975M in China Antitrust Spat

Qualcomm's 14-month legal battle with China's National Development and Reform Commission (NDRC) has come to an end, with the chipmaker agreeing to pay a $975 million fine for violating anti-monopoly laws.

San Diego-based Qualcomm Inc. (Nasdaq: QCOM) also had to agree to several changes in how it approaches licensing agreements with Chinese handset makers. (See Qualcomm to Pay $975M Fine to China.)

The resolution, announced on Monday, is the result of more than a year of antitrust probe into Qualcomm's 4G licensing fees, which the NRDC has determined to monopolize the market under China's Anti-Monopoly Law (AML). (See Qualcomm Looks to Soften China Antitrust Blow .)

In addition to paying a fine of $975 million (6.088 billion Chinese Yuan Renminbi), Qualcomm has agreed to several changes on its business practices in China, where it has a huge processor business. Amongst the changes detailed in a statement, Qualcomm said it will "offer licenses to its current 3G and 4G essential Chinese patents separately from licenses to its other patents and it will provide patent lists during the negotiation process."

The chipmaker has also agreed to lower its licensing fees to 5% for 3G devices and 3.5% for 4G devices -- including tri-mode LTE-TDD devices -- that don't have CDMA or WCDMA for branded devices sold for use in China, using a royalty base of 65% of the net selling price of the device.

For more communications processor market coverage and insights, check out our dedicated comms chips content channel here on Light Reading.

Qualcomm says it will not challenge the NDRC's findings and expressed relief that the long process is over. "We are pleased that the resolution has removed the uncertainty surrounding our business in China, and we will now focus our full attention and resources on supporting our customers and partners in China and pursuing the many opportunities ahead," writes Qualcomm CEO Steve Mollenkopf, who has made several trips to China since being appointed CEO last March, in the statement.

The chip giant has demonstrated its commitment to the Chinese market, announcing late last year it would invest more than $150 million in the country's startups other initiatives in the market. (See Qualcomm to Invest $40M in Chinese Startups.)

Qualcomm is also adjusting its financial guidance as a result of the settlement with China. Despite the hefty fine, it says revenues for 2015 will be around $26.3 billion to $28 billion, up slightly from the $26 to $28 billion it previously forecast. Earnings per share, however, are estimated to be $3.56 to $3.76, including the charge levied against it, down from $4.04 to $4.34 previously estimated. (See Qualcomm Reports Fiscal Q1.)

After the settlement was announced Monday evening, Qualcomm's stock was up 1.15%, or 0.76 points, to $67.11.

— Sarah Thomas, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editorial Operations Director, Light Reading

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About the Author(s)

Sarah Thomas

Director, Women in Comms

Sarah Thomas's love affair with communications began in 2003 when she bought her first cellphone, a pink RAZR, which she duly "bedazzled" with the help of superglue and her dad.

She joined the editorial staff at Light Reading in 2010 and has been covering mobile technologies ever since. Sarah got her start covering telecom in 2007 at Telephony, later Connected Planet, may it rest in peace. Her non-telecom work experience includes a brief foray into public relations at Fleishman-Hillard (her cussin' upset the clients) and a hodge-podge of internships, including spells at Ingram's (Kansas City's business magazine), American Spa magazine (where she was Chief Hot-Tub Correspondent), and the tweens' quiz bible, QuizFest, in NYC.

As Editorial Operations Director, a role she took on in January 2015, Sarah is responsible for the day-to-day management of the non-news content elements on Light Reading.

Sarah received her Bachelor's in Journalism from the University of Missouri-Columbia. She lives in Chicago with her 3DTV, her iPad and a drawer full of smartphone cords.

Away from the world of telecom journalism, Sarah likes to dabble in monster truck racing, becoming part of Team Bigfoot in 2009.

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