China Probes Qualcomm on Antitrust

Qualcomm, the world’s largest chipmaker has been faced with an antitrust probe from Chinese regulators. This was made known on Monday, 25th November. Qualcomm deny knowing any form in which they had violated antitrust in the country, but they are willing to cooperate with China’s National Development Reform Commission (NDRC).

NDRC has not specifically said the reason why Qualcomm is been probed or investigated. But on China’s state media on Sunday quoted an NDRC official saying regulators would focus antitrust investigations on six industries, ranging from technology to medicine.

Qualcomm is a company that makes processors and communications chips for mobile phones, they have been serving customers like Apple Inc. and Samsung Electronics Co. They even intend supporting china’s largest cellphone producer who are planning to make a major move to 4G wireless technology next year. This move will serve has a new source of royalty revenue to the country.

Some analysts speculates that China’s antitrust probe is like an attempt to gain leverage in royalty negotiations with Qualcomm before the roll out of the 4G wireless technology next year.

“We suspect this investigation is related to the forthcoming launch of TD-LTE by China Mobile in early 2014 and the negotiations on chip pricing and license pricing between Qualcomm and Chinese-based handset (manufacturers) that are likely occurring right now,” McCourt wrote in an note to clients.

Qualcomm recorded about $12.3 billion in revenue from China in the fiscal year ended in September, or about half of the company’s total revenue.

Earlier this year, sometime in August there was report from a senior Chinese official that China had put pressure on about 30 foreign firms, including General Electric Co (GE.N) and Siemens (SIEGn.DE), to admit to antitrust violations and warned them against using external lawyers to fight accusations from regulators.

Actually there is no information on how long this investigation will last, but from past records, NDRC has carried out a four-month investigation on some other companies earlier this year.