Qualcomm to pay $975 million to resolve China antitrust dispute

Tue Feb 10, 2015 12:02am EST
 
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By Noel Randewich and Matthew Miller

SAN FRANCISCO/BEIJING (Reuters) - Qualcomm Inc has agreed to pay a fine of $975 million, the largest in China's corporate history, ending a 14-month government investigation into anti-competitive practices.

The deal - the details of which were first reported by Reuters on Monday - also requires Qualcomm to lower its royalty rates on patents used in China, likely helping local smartphone makers such as Xiaomi Technology Co Ltd [XTC.UL] and Huawei Technologies Co Ltd [HWT.UL].

Qualcomm said the agreement removes a major source of concern for its investors, sending shares of the San Diego-based chipmaker up 2.8 percent to $69 in after-hours trading.

China's expanding high-speed 4G network is driving demand for smartphones with leading-edge technology, but Qualcomm's opportunities have been clouded by the antitrust probe, which has also contributed to problems in collecting royalty payments from device makers.

Qualcomm said in a statement on Monday it would not contest the National Development and Reform Commission's (NDRC) finding that it violated an antitrust law.

Asked whether the resolution in China could affect the outcome of ongoing antitrust probes into Qualcomm in Europe and the United States, Qualcomm President Derek Aberle said, "We fully respect their authority, but we don't believe it's likely that other agencies will necessarily meet similar conclusions."

The U.S. firm cut its full-year earnings estimate, putting the cost of the fine at about 58 cents per share, but it raised the lower end of its revenue forecast slightly.

"It removes a significant source of uncertainly from our business and positions our licensing group to really participate in the full growth of the wireless market in China," CEO Steve Mollenkopf said in a phone interview. "It's something we're happy is over."   Continued...

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