Considered the largest fine in the country’s corporate history, US chipmaker will pay $975 million to Chinese authorities to end a 14-month anti-trust investigation into its patent licensing practices.
On Monday, Qualcomm released a statement saying that it would not contest the ruling.
“Although Qualcomm is disappointed with the results of the investigation, it is pleased that the NDRC (National Development and Reform Commission) has reviewed and approved the company's rectification plan,” a statement by the company read.
Qualcomm is considered the biggest supplier of chips used in smartphones and has little competition in terms of how it prices its components. Now though, as a result of the ruling, the company will charge royalties based on just 65% of the selling price of phones in China (as opposed to the entire price).
This change in pricing policy is expected to help smartphone makers Xiaomi and Huawei.
While the loss might sting, Qualcomm will not look to leave China’s market any time soon — the country’s expanding high-speed 4G network is driving demand in the world’s largest smartphone market. In fact, Qualcomm made about half its global revenue of $26.5bn in China in the last fiscal year.
So, despite the fine, Qualcomm will remain a key player in the industry’s development in China.
And the market agrees — news of the settlement sent Qualcomm’s shares up 2.8% in after-hours trading. Also, now that the case is officially behind the company, Qualcomm has increased its profit and revenue forecast for the current fiscal year.
“We will now focus our full attention and resources on supporting our customers and partners in China and pursuing the many opportunities ahead,” said chief executive Steve Mollenkopf.
Via BBC
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