Another tech giant has bowed down to Chinese might. After 14 months of investigations and negotiations, US-based chip maker Qualcomm has agreed to settle the antitrust dispute brought upon it by China’s National Development and Reform Commission (NDRC). Among the concessions and changes it will be making to its licensing fees, Qualcomm is not contesting the fine being imposed upon it to the tune of $975 million. It is the largest fine paid by any company in China to date.
Just like any tech company, Qualcomm has been looking to strengthen in business in China. In fact, it has already started to take root, with many mobile devices starting to carry its chips, perhaps much to the worry of Chinese chip makers such as Huawei. The NDRC investigation, however, practically brought that growing business to a standstill, as the uncertainty of Qualcomm’s situation prevented partners from making further deals or buying licenses.
This perhaps is one reason why Qualcomm seems have to caved in to the NDRC’s terms. Not only has it accept the requirements to change its business practices in China as part of its rectification plan, it is also accepting the fine that amounts to almost $1 billion. The NDRC has been accused by foreign companies of using intimidation and antitrust litigation to limit royalty fees. Whether or not it’s true, and the Chinese government will of course deny it, this settlement will definitely show that the agency has a lot of bite in addition to bark.
This is the second huge blow to Qualcomm this year just in the first quarter alone. Last month rumors have started circulating that Samsung’s Galaxy S6 will not be wearing the Snapdragon 810 because of overheating issues. Qualcomm implicitly admitted this by saying that they have lost a large customer but it was also quick to rally supporters around its latest chip. It might very well need that much support, not to mention sales, if it is to recoup its losses in this settlement.
SOURCE: Qualcomm (PDF)