For Qualcomm, China settlement may be just the beginning

Sun Dec 28, 2014 9:08pm EST
 
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By Noel Randewich and Matthew Miller

SAN FRANCISCO/BEIJING (Reuters) - The settlement of China's anti-trust probe into Qualcomm Inc is likely to intensify global scrutiny of the firm's highly profitable patent licensing business, and may even call into question its worldwide contracts with smartphone makers such as Apple and Samsung.

China's National Development and Reform Commission (NDRC) is moving to wrap up its 13-month investigation into the U.S. chipmaker as soon as possible, the regulator said in a statement on Friday, bringing to an end one of the most high profile of a slew of such investigations by Beijing into western firms.

Any deal is likely to include a record-breaking fine, as well as changes to how Qualcomm licenses its technology to handset makers in China, according to industry sources and local press reports.

That could weaken the firm's prized technology-licensing business across the global smartphone industry by increasing pressure from regulators in other countries. Anti-trust probes in Europe and by the U.S. Federal Trade Commission (FTC) may be related to China's investigation, Qualcomm has said.

"It's not an overstatement to say they're under attack," said Thomas Cotter, a patent expert and professor at the University of Minnesota Law School. "Nobody knows how it will play out but the fact that there is an FTC investigation tells you something."

Qualcomm declined to comment.

ROYALTY CHANGES   Continued...

 
A Qualcomm sign is pictured in front of one of its many buildings in San Diego, California November 5, 2014.  REUTERS/Mike Blake