Fri, Jul 25, 2014 - Page 15 News List

China regulator says Qualcomm has a monopoly

UNDERCUTTING:A Chinese report said that the chipmaker was charging lower royalties for patents to undercut competitors and dictate license fees

Reuters, BEIJING

China’s antitrust regulator has confirmed that Qualcomm Inc, one of the world’s biggest mobile chipmakers, has a monopoly, the state-run Securities Times newspaper reported yesterday, as the US firm’s chief executive held talks in China.

The regulator, the National Development and Reform Commission (NDRC), is investigating Qualcomm’s local subsidiary after it said in February 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 US$1 billion.

The Securities Times report, based on unidentified sources it said were close to the commission, did not say whether the regulator had determined that Qualcomm had abused its monopoly.

LOWER ROYALTIES

The newspaper said Qualcomm was charging lower royalties for patents to undercut competitors that 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 licensing fees.

Qualcomm CEO Steven Mollenkopf, who launched a US$150 million “strategic venture fund” in China yesterday, declined to take questions from reporters. A Qualcomm spokeswoman traveling with Mollenkopf also declined to comment.

The commission declined to provide immediate comment when contacted by telephone.

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

SERIOUS INVESTIGATION

“The NDRC anti-monopoly investigation is extremely serious,” the Securities Times quoted the sources as saying.

“It’s not just Qualcomm under investigation but also its customers, and [the commission] has sealed off a lot of documentation,” it said.

While Qualcomm’s share of patents relating to wireless network technology standards for mobile communications has fallen, their prices have not changed, the report said.

Under China’s six-year-old anti-monopoly law, the commmission can impose fines of between 1 and 10 percent of a company’s revenues for the previous year. Qualcomm earned US$12.3 billion in China for its fiscal year ended Sept. 29, or nearly half of its global sales.

Qualcomm on Wednesday gave a quarterly earnings forecast that fell short of analysts’ average estimate. The company cited missed royalty payments for chips running on the new long-term evolution standard as manufacturers fail to report phone sales or refuse to sign contracts.

Net income in the fourth quarter, which ends in September, is expected to be US$1.03 to US$1.18 a share, the San Diego-based company said in a statement.

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