Qualcomm To Pay Record $1 Billion Fine To Chinese Government In Antitrust Case

News
By Lucian Armasu
published

Qualcomm recently entered some antitrust disputes with the European Union Commission and the Chinese government. Both have investigated the company for anti-competitive practices. A new report from Reuters said that the Chinese antitrust agency, the National Development and Reform Commission (NDRC), has decided to fine Qualcomm a record $1 billion, as well as force the company to cut its licensing prices in China by a third.

"The NDRC will soon release a new antitrust settlement," Xu Kunlin, the head of the agency's antitrust division, said at a law conference on Monday. "Qualcomm will be fined several times the total amount the NDRC fined last year."

Last year, Qualcomm earned about $13 billion in revenue in China alone, with a big chunk of profits coming from its licensing arm. Since the company entered the antitrust dispute with the Chinese government, it has started making a variety of investments in Chinese companies as a way to show the government that it is committed to doing business in China.

Qualcomm partnered with Semiconductor Manufacturing International Corp, a large chip maker in China, to manufacture its chips, and it also invested $150 million in Chinese startups that develop mobile technologies for Internet, e-commerce, semiconductors, education and health.

Although the NDRC started investigating multiple foreign companies for anti-competitive issues since it got its new leader, Xu Kunlin, last year, the agency stated that it's not actually targeting foreign companies.

Now that Qualcomm has been fined by the Chinese government, the chances that the EU Commission will also fine the company have increased. The EU Commission will at the very least want lower licensing prices for fear that the Chinese businesses would become more competitive than the European ones.

These antitrust fines come at a relatively bad time for Qualcomm, when it has already lost a major customer in Samsung, at least for the Galaxy S6 device. Samsung, as well as other OEMs, will likely continue to turn to Qualcomm for the majority of its devices for the time being, so the company's revenues shouldn't be disrupted too much this year.

Follow us @tomshardware, on Facebook and on Google+.

Lucian Armasu
Lucian Armasu
Lucian Armasu is a Contributing Writer for Tom's Hardware US. He covers software news and the issues surrounding privacy and security.
21 Comments Comment from the forums
  • knowom
    The irony of China with a antitrust case because they so laughably respect the law.
    Reply
  • Grognak
    Good job digging your own grave, EU. Go on, keep supporting China, it's not like there's anything they haven't copied or bought.
    Reply
  • Shankovich
    Now they're enforcing anti trust laws while they blatantly copy the hell out of everything, from phones to aircraft and cities...Seriously, it's not worth outsourcing your company to China.
    Reply
  • alextheblue
    Now they're enforcing anti trust laws while they blatantly copy the hell out of everything, from phones to aircraft and cities...Seriously, it's not worth outsourcing your company to China.

    So many companies are damning themselves (or have already damned themselves) with their short-sighted behavior. They were too eager to not only outsource to China, but to succeed in the Chinese market. They already have the means to build everything, they only tolerate these foreign entities so long as they continue to develop technology they can license (at forced rates) or steal. As their domestic copycat designs gain steam in the market both local and abroad, foreign firms start to lose leverage and they really grab you by the nuts.

    To be fair in many cases we've pushed companies to move production or even move out of the country entirely. High taxes, high cost of labor, and prohibitive regulations. Why would you WANT to stick around? So there's plenty of blame to go around. Personally I try to buy products made in friendlier nations whenever possible but you can't always avoid it.
    Reply
  • vaughn2k
    Sooner or later, everyone's out from CHina...
    Reply
  • kenjitamura
    Wow. Coming under fire in an anti-trust lawsuit in China and losing the trial would mean Qualcomm must have been doing some insane levels of anti-competitive practices. The only analogy I can think of with a comparable level of comic irony and hypocrisy for this situation would be a pedophile being convicted in a trial by a jury of Nambla members.
    Reply
  • f-14
    greed is a killer. it's bad business to do business with china building your stuff, they only want your tech and when you don't comply with their terms they shut you out. worse yet, you're helping bring a brutal military dictatorship regime up to 21st century snuff who are bent on your doom.
    and just now are leaders are starting to catch a whiff of what critics have pointed out long before this even started:

    http://nypost.com/2015/02/08/chinas-secret-plan-to-topple-the-us-as-the-worlds-superpower/

    this 'advisor' thinks china wants to be a super power.....no, china wants the whole damn world.

    china declared it wanted it's own CPU architecture so as to avoid the american NSA and CIA spy operations via american government mandated back doors for this very purpose.

    http://www.epi.org/publication/briefingpapers_pntr_china/
    Reply
  • Duckhunt
    I suppose Qualcomm did get so big by playing nicely. What about the Zombie. They go free. So much injustice.
    Reply
  • gggplaya
    It doesn't say exactly what qualcomm did?? As far as we know, qualcomm engineers the best SOC for mobile devices, with very good processors, good power efficiency and built in wireless radios for cellular and wifi. It's the total package on one chip. If they simply had high licensing fees, i can understand that. All their hard work in R&D to developing a kick ass chip should pay off. It's not their fault everyone else is behind.

    If they were doing other things to block competitors from the market, then i can understand the antitrust lawsuit. But it doesn't say either way.
    Reply
  • Urzu1000
    People seem to be very anti-china in these comments. I've known some Chinese people that I've met online before. They're just regular people who can be cool to hang out with.

    Even more so, let's not forget how important China was in WWII. They're the unsung heroes of that war.
    Reply