Qualcomm could face a large fine after Chinese regulators determined it has a monopoly in the country

Qualcomm accused of monopoly by Chinese regulator

China's competition regulator has declared that Qualcomm, one of the world's biggest mobile chipmakers, has a monopoly.

The National Development and Reform Commission (NDRC) is investigating Qualcomm's local subsidiary after it said in February that the US chipmaker was suspected of overcharging and abusing its market position in wireless communication standards, allegations which could see it hit with record fines of more than $1bn (£600m).

The state-run Securities Times newspaper said unidentified sources close to the NDRC had confirmed the ruling but did not say whether the regulator had determined that Qualcomm had abused its monopoly.

Angela Zhang, an antitrust expert at King's College London, said the report was a "loose expression that the NDRC has gathered facts that Qualcomm has abused its dominant position.

"It seems likely that the decision will be announced soon," she said, noting that having a monopoly alone is not a violation of China's anti-monopoly law.

Qualcomm CEO Steven Mollenkopf, who launched a $150m 'strategic venture fund' in China on 24 July, declined to take questions from reporters and a spokeswoman travelling with Mollenkopf also refused to comment on the newspaper report.

The NDRC declined to provide immediate comment.

The Securities Times said Qualcomm was charging lower royalties for patents to undercut competitors who have similar technology and maintain market share. The report also said that Qualcomm, as the only provider of chips for high-end phones, can dictate those fees.

During the launch of the China fund, Qualcomm CEO Mollenkopf defended the company's licensing programme, saying the $30bn spent in research and development over the company's lifetime had allowed it to spread its technology in China.

"It's really why anybody that signs up on a licence actually does it voluntarily – because it is a way of leveraging all of that R&D," Mollenkopf said.

China is a key market for Qualcomm, accounting for nearly half of its revenue. The country is the world's biggest market for smartphones and is preparing to roll out faster 4G mobile networks this year.

While most of Qualcomm's revenue comes from selling chips that enable phones to communicate with carrier networks, most of its profit comes from licensing patents for its widespread CDMA cellphone technology.

The Securities Times report said the NDRC was probing Qualcomm's local sales data and that Qualcomm president David Aberle has been communicating with the NDRC over issues relating to the anti-monopoly investigation.

Analysts say that the process of confirming sales data is common in the late stage of an anti-trust investigation, and that the NDRC is likely to be calculating the extent of fines.

Under China's six-year-old anti-monopoly law, the NDRC can impose fines of between 1 and 10 per cent of a company's revenues for the previous year. Qualcomm earned $12.3bn in China for its fiscal year ended September 29, or nearly half of its global sales. Qualcomm has previously said it is cooperating with the investigation.

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