China fines Qualcomm $976m for monopoly practices

Dylan Bushell-Embling
11 Feb 2015
Daily News

China's National Development and Reform Commission (NDRC) has fined Qualcomm 6.09 billion yuan ($976.2 million) for alleged anti-competitive practices surrounding licensing of its standards-essential patents.

The NDRC has also secured commitment from Qualcomm to offer licenses to its essential 3G and 4G Chinese patents separately from licenses to its other patents.

Qualcomm has agreed to charge royalties of 5% for 3G devices and 3.5% for 4G devices that do not implement CDMA or W-CDMA, and not to condition the sale of baseband chips on the custoer signing a license agreement with terms found to be unreasonable by the NDRC..

Existing Chinese licensees will be offered to change to the new terms backdated to the start of this year.

In a statement, Qualcomm said it is disappointed with the NDRC's decision, but that it does not plan to appeal the order.

“We are pleased that the investigation has concluded and believe that our licensing business is now well positioned to fully participate in China’s rapidly accelerating adoption of our 3G/4G technology,” Qualcomm president Derek Aberle said.

“We appreciate the NDRC’s acknowledgment of the value and importance of Qualcomm’s technology and many contributions to China, and look forward to its future support of our business in China.”

Qualcomm meanwhile revealed that based on its current outlook, the company expects revenues in the range of $26.3 billion to $28 billion, up from its previous guidance of $26 billion to $28 billion.

But the impact of the NDRC fine has knocked the chipmaker's GAAP diluted earnings per share estimate down to $3.56 to $3.76, compared to its prior guidance range of $4.04 to $4.34.

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