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China Launches Antitrust Investigation Against Qualcomm

26 November 2013

Qualcomm Inc. (San Diego) has reported that China's National Development and Reform Commission (NDRC) has commenced an investigation of the company relating to the Chinese Anti-Monopoly Law (AML).

Qualcomm said in a statement that it is not aware it has violated the AML and that it will cooperate with the NDRC during the confidential investigation.

Qualcomm is the parent company of its QTL patent licensing business and Qualcomm Technologies Inc., which operates Qualcomm’s engineering, research and development functions and substantially all of its products and services businesses, including its semiconductor business.

Qualcomm was the original developer of code division multiple access (CDMA) mobile communications protocols and holds many patents related to 3G and 4G communications. The company has also been very successful in recent years selling modem chipsets and application processors for mobile phones. The 3G air interfaces involve the use of CDMA protocols, and royalties from its patents in this area are reported to represent a significant proportion of Qualcomm's revenue.

The firm has been involved in a number of patent-related lawsuits and antitrust complaints over the last decade. The European Commission investigated Qualcomm's royalty rates between 2005 and 2009 after a 2005 complaint by Nokia, Broadcom, Texas Instruments, Ericsson and two other groups.

The development in China of the Time Division Synchronous Code Division Multiple Access (TD-SCDMA) air interface—a scheme originally proposed for adoption as a 3G standard in Europe by Siemens—was partly done to give China a differentiated position in mobile telephony and avoid dependence on western technology.

Qualcomm held 43 percent of the global smartphone applications processor market in 2012, according to Strategy Analytics. In addition, Qualcomm is one of very few chip vendors that has integrated a modem for the 4G communications standard LTE with the application processor.

Meanwhile, in China, a business group associated with Tsinghua University (Beijing, China) and national communications interests has moved to acquire TD-SCDMA baseband chip vendor Spreadtrum Communications and RF chip vendor RDA Microelectronics, which may be merged.

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