It’s official in China: Qualcomm is currently under investigation for abusing their competitive position to overcharge clients.
It was stated in the China-run Security Times newspaper article that the giant, who is well known in making electronic chips for wireless communication, has been liaising with the local business regulatory National Development and Reform Commission (NDRC) with regards to the claims.
Neither party have commented in relation to the claims.
The article went on to add that Qualcomm was charging royalties at lower prices to undercut competitors who hold similar technology, in order to maintain the local market share.
Qualcomm, in turn has strongly defended its actions of spending $30 billion USD in research and development so that the company is able to spread their technology across China.
China is one of the key markets for San Diego-based Qualcomm, which accounts for nearly half of their total revenue.
While they are known for making chips, the main revenue for Qualcomm is actually in the licensing of patents that they hold for their proprietary, CDMA cellphone technology.
Adele Zhang, an antitrust specialist in King’s College London, told Reuters that having a monopoly alone is not a violation of the anti-monopoly law.
However, analysts have confirmed in the Security Times article that NDRC is confirming the local sales data of Qualcomm, which is often done in the later stage of an anti-trust investigation, where they use the sales values to estimate the extent of fines.
Based on the anti-monopoly law in China (which has been enforced for six years) Qualcomm can be slapped with a fine between one to ten percent of its mainland revenue, which could reach up to $1.2 billion.
It’s going to be a hefty price for them to pay if they want to continue doing business in China.