The Chinese government recently fined Qualcomm, the manufacturer of baseband communication chips for Apple and others, for almost a billion dollars in an anti-trust case. According to the prosecution, the company was found to have abused its dominant position in the wireless chip technology industry by charging what was deemed “unfairly high” licensing fees to manufacturers of smartphones and tablets.
According to the Guardian, the fine, which amounts to $960M ($6B Yuan), is the largest fine which was ever imposed on a foreign company. China’s National Development and Reform Commission (NDRC) said that the fine was calculated as 8% of Qualcomm’s 2013 revenue in China and the country is in actuality responsible for around half of Qualcomm’s total revenue. Chinese regulators said that Qualcomm bundled together patent licenses that force Chinese companies to buy unwanted licenses in order to get the 3G and 4G ones that they actually need.
The case is most likely not going to affect Apple this year as the company orders its baseband from Qualcomm instead of licensing patents. That being said, KGI predicted that the move may have an impact on Apple next year as they would be buying 30% of its baseband chips from Intel in 2016 instead of solely sticking with Qualcomm. We’ll have to wait and see how the news pans out.
Source: KGI Securities, The Guardian
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