Chinese authorities have ruled that Qualcomm has a monopoly in the country, according to a report by the state-run Securities Times newspaper.
However, it is not clear whether the National Development and Reform Commission (NDRC) has concluded that the chipmaker is abusing its dominant position.
In February, China’s Communications Industry Association (CCIA) reportedly filed a complaint against the US chipmaker for abusing what it alleged is a dominant market position.
The NDRC subsequently said it was looking into Qualcomm’s practices after receiving complaints that it was charging higher prices in China than elsewhere.
Angela Zhang, an antitrust expert at King’s College London, told Reuters that it is likely a decision will be announced soon, noting that having a monopoly alone is not a violation of China’s anti-monopoly law.
If the allegations are proven, the chipmaker could be hit by a fine between 1 per cent and 10 per cent of revenue from the previous year, according to Reuters.
Speaking during Qualcomm’s quarterly results presentation yesterday, Qualcomm president David Aberle suggested that “some loss would be probable” from the Chinese probe.
Qualcomm said in its latest results statement that China “presents significant challenges, as our business practices continue to be the subject of an investigation by the China National Development and Reform Commission”.
The company believes certain licensees in China are not currently fully complying with their obligations to report their sales of licenced products to Qualcomm, while unlicensed companies may delay securing deals for the duration of the NDRC investigation.
Some Chinese customers have complained that the chipmaker is using its dominant position to charge high patent fees for its chipsets, although industry experts believe the NDRC is attempting to drive down domestic costs to support the rollout of 4G networks.
The news comes as Qualcomm announced a $150 million strategic venture fund in China, which will invest in companies developing mobile technologies for the internet, e-commerce, semiconductors, education and health.
“Our strategic collaboration with and technical support of the Chinese wireless industry has helped this vibrant ecosystem, helped drive direct and indirect employment, and contributed to economic growth in the entire Chinese wireless industry,” Steven Mollenkopf, the company’s CEO, noted.
For the quarter ended 29 June, Qualcomm reported a 9 per cent year-on-year sales increase to reach record revenue of $6.81 billion, with net income up 42 per cent to $2.24 billion.
Despite its positive numbers, the company lowered its near-term financial outlook for its licensing business.