A 14-month investigation into Qualcomm’s business practices in China is reportedly nearing completion. That said, its conclusions will clearly not be loved by the well known chip maker.
Apparently the company may be forced to pay a $ 1 billion fine by the Chinese authorities, for engaging in anticompetitive practices over there. This would be the biggest amount ever paid by any company in China.
Last week, during talks between Qualcomm representatives and those of China’s National Development and Reform Commission (NDRC) “significant progress” has allegedly been made towards ending the investigation.
Aside from the record fine, Qualcomm could also be forced to lower its royalty rates by around a third for patents used in China. Additionally, the company would also agree to make changes to its licensing practices, yet not in a very damaging way for its bottom line.
The NDRC is soon expected to announce the antitrust settlement with Qualcomm. The record fine won’t influence the company’s financials that much, since around half of its $ 26.5 billion global revenue was earned in China for its latest fiscal year.
However, a big part of Qualcomm’s profit in China came from its patent licensing arm collecting royalties. This business was disrupted by the NDRC’s investigation, which created disputes between the chip maker and its licensees, and caused other companies to delay signing new licensing agreements.