US telecom firms center of overcharging probe
Print Edition
Two US-based telecommunication firms, including Qualcomm Inc, the world’s No. 1 chip designer, are the subject of an anti-monopoly investigation, China’s top regulator confirmed yesterday.
If found to be in violation of the rules, Qualcomm could face a fine of up to US$1 billion, and the price of smartphones could come down in the world’s No. 1 mobile phone market.
Qualcomm and InterDigital Inc are suspected of overcharging and abusing their market positions in China, the National Development and Reform Commission said.
The investigation follows complaints from unspecified Chinese industry associations and companies, commission official Xu Kunlin, who is in charge of monopoly regulation, told reporters.
It was the first official confirmation of an investigation launched in the middle of last year.
The NDRC didn’t say whether any conclusions had been reached.
“The monopoly (of Qualcomm) is industrywide because of its huge market share and technological advantages,” claimed Gu Wenjun, a Shanghai-based analyst with IHS iSuppli, a US-based research firm.
Qualcomm’s share of the smartphone market has reached about 40 percent in China, ranking top ahead of MediaTek and Intel. Its chips are widely used in Samsung, Sony, HTC and Huawei phones.
It designs chips for the majority of Android phones and charges clients a fixed license fee and a “considerable” portion of the price of each phone sold, analysts said.
Qualcomm, which has not commented on the issue, said in November it was aware of China’s antimonopoly law and would continue to cooperate with the NDRC.
Under the anti-monopoly law, the NDRC can impose fines of between 1 and 10 percent of a company’s revenue for the previous year.
Qualcomm’s revenue reached US$12.3 billion in China for its fiscal year ended on September 29.
InterDigital is suspected of asking for excessive royalties on its technology from Chinese firms such as Huawei Technologies and ZTE Corp, NDRC said.
InterDigital said earlier this month that it was continuing to cooperate with an NDRC investigation.
In May 2012, Huawei filed an antitrust complaint with the European Commission against InterDigital over what it called an “abuse” of 3G technology patents. Late last year, InterDigital and Huawei agreed to resolve their patent-licensing disputes, according to Reuters.
Any settlement with InterDigital or Qualcomm is likely to include a commitment to lower patent licensing fees for Chinese customers, according to analysts.
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