Qualcomm accepts 975 million dollars fine

Absrtact: The NDRC's antitrust investigation of Qualcomm has finally ended, with Qualcomm paying 975 million of dollars in fines to reconcile and creating the highest record of China's anti-monopoly fines. In addition, the NDRC has asked Qualcomm to make a number of adjustments to China's smartphone patent licensing.

The National Development and Reform Commission has finally drawn a full stop on Qualcomm's antitrust investigation, which has created the highest record of China's anti-monopoly fines by paying 975 million of dollars in fines for reconciliation. In addition, the NDRC has asked Qualcomm to make a number of adjustments to China's smartphone patent licensing.

Although there have been rumours that Qualcomm would defend itself by legal means to negate the NDRC's executive decision. But now it looks like Qualcomm is ready to harmony. Qualcomm President Derek Aberle said he would not challenge the NDRC's decision, "after the investigation ended, Qualcomm was able to actively participate in the wave of 3g/4g technology popularization in China." At the same time, Qualcomm also raised revenue and profit forecasts for fiscal year 2015.

This is a very good account, Qualcomm although in the chip business Charybdis, MTK in the low-end market Gongchenglvede, Samsung this year began to discard Gaotong long chip. But in 3G/4G patent licensing Qualcomm is still a single, domestic Huawei Heiss, Intel Infineon 4G baseband chips are mainly for their own use. In 2015, Q1 earnings showed that patent licensing fees accounted for 58% per cent of the pre-tax profits, with a cumulative income of over 30 billion dollars over the past five years. But more than a year of surveys have significantly affected Qualcomm's authorized income in China, and some Chinese handset makers have delayed paying royalties or reduced payments.

At the same time, the data show that last year, China's mobile phone cumulative shipments reached 452 million, 3G mobile phone shipments 220 million, 4G mobile phone shipments of 171 million, is expected to 2015 national 4G users will reach 250 million households. China's best-selling LG, Samsung, Sony, Oppo and other brands of mobile phones are Qualcomm customers. As a result, the 975 million-dollar fine is a good deal compared with the popular dividend from China's 3g/4g, which accounts for only half of the net profit of Qualcomm 2015Q1 2 billion.

In addition, Qualcomm is being investigated by the European Commission and the Federal Trade Commission for possible breaches of European and US antitrust laws. The reconciliation with the NDRC will boost investor confidence.

Key terms of the Qualcomm rectification plan:

In the patent authorization, Qualcomm will be independent of the existing 3G, 4G and other important Chinese patents to provide authorization (no longer and Qualcomm other patents bundled). It will also provide a list of patents during the negotiation process. As part of the licensing negotiations, Qualcomm will negotiate with the licensee in good faith to provide a reasonable price if Qualcomm seeks to obtain a cross authorization from the Chinese licensee.

For the sale in China, access to Qualcomm 3G, 4G patent licensing equipment, Qualcomm charge a different percentage of royalties. For 3G equipment (including multimode 3g/4g equipment) charge 5%, to do not carry out CDMA or WCDMA network protocol 4G equipment (including 3 die LTE-TDD equipment) charge 3.5% of the patent fee; Each kind of royalties is based on the equipment sales net of 65%, no longer in accordance with the full price of equipment charged.

The licensee May, from January 1, 15, choose to implement the provisions for the preparation of equipment sales in China.

For the development and Reform Commission to determine the terms of the authorization agreement unreasonable or not in the authorization agreement to challenge the unreasonable terms of the chip customers, Qualcomm can not limit the sale of their baseband chips. However, the provision does not require high access to any entity selling chips without a Qualcomm authorization. At the same time Qualcomm also has the right to refuse to sell chips to those who do not comply with patent licensing agreements, do not report authorized equipment sales customers.