Semiconductor Value Chain

Report: Qualcomm Close to Settling China Dispute

09 February 2015

Leading fabless chip company and IP licensor Qualcomm Inc. is likely to pay a record-breaking fine of about $1 billion to settle a 14-month Chinese government investigation into anti-competitive practices, according to a Reuters report. The deal could also involve Qualcomm reducing royalty rates on its patents by around a third the report said, citing an unnamed source.

China's National Development and Reform Commission (NDRC) opened an investigation of Qualcomm relating to the Chinese Anti-Monopoly Law (AML) in November 2013.

Qualcomm (San Diego, Calif.) 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.

However, Qualcomm has been investigated multiple times and in multiple territories over the rates at which it has set royalties. 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.

Discussions between NDRC and Qualcomm have intensified over recent weeks, the report said.

"The NDRC will soon release a new antitrust settlement," the report quoted Xu Kunlin, the head of the agency's antitrust division, as saying and as adding, "Qualcomm will be fined several times the total amount the NDRC fined last year."

During the year it has been under investigation Qualcomm has made moves to extend its presence in China. In July 2014 Qualcomm announced it would partner with Chinese foundry Semiconductor Manufacturing International Corp (Shanghai, China) to produce 28nm process technology and wafer manufacturing services to be used for Qualcomm’s Snapdragon processors. In December 2014 it announced it would invest $40 million in four Chinese fabless chip startups.

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Related links and articles:

IHS Technology Semiconductor & Components Page

News articles:

Qualcomm Invests $40M in Chinese Startups

Qualcomm, SMIC Partner for 28nm Snapdragon Production

Qualcomm's China Troubles Cloud $6.8 Billion Quarter

China Launches Antitrust Investigation of Qualcomm

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