UPDATED 27 NOVEMBER: Qualcomm said a Chinese state agency opened an inquiry into its activities under a local anti-monopoly law, a move which analysts say reflects a pro-consumer bent in the country as well as concerns over Qualcomm’s market power.
The US company faces a probe by the country’s National Development and Reform Commission (NDRC).
However, the NDRC has not told Qualcomm any more about its investigation and the company is not aware that it faces any charges at present.
A number of explanations for the investigation have been put forward by observers.
Generally, the Chinese government has backed a crackdown on business practices that might inflate retail prices for consumers. Telecommunications is one of six areas under investigation.
Analysts speculated it might also be a move by China to boost local competitors to Qualcomm, including Spreadtrum Communications.
Qualcomm’s share of the LTE chipset market stood at more than 98 per cent in 2012, according to Will Strauss, an analyst with Forward Concepts, quoted by The Wall Street Journal.
At an analyst day last week, Qualcomm CEO Paul Jacobs was quizzed about whether the company’s Chinese business might have been damaged by concerns about the US National Security Agency spying on mobile calls.
The reports increased the focus on security of data traffic but they did not hit hardware sales, said Jacobs, as reported by Bloomberg.
Qualcomm will be hoping that the country’s imminent award of 4G licenses will be a boost to the silicon vendor, which licenses its technology to vendors building these networks, as well as device players supporting 4G.
“Globally, Qualcomm has more than 250 3G CDMA licensees, including more than 110 3G CDMA licensees in China. These 3G CDMA licenses cover 3G CDMA + 4G/OFDMA multimode products,” a spokesperson told Mobile World Live. “We also have more than 90 single-mode 4G/OFDMA licensees, including more than 55 licensees in China. OFDMA covers LTE FDD and TDD modes alike.”
However, Gus Richard of Piper Jaffray believes the NDRC investigation throws doubt over its future Chinese revenue stream. “I don’t think China’s going to pay them,” he said.