Qualcomm recently entered some antitrust disputes with the European Union Commission and the Chinese government. Both have investigated the company for anti-competitive practices. A new report from Reuters said that the Chinese antitrust agency, the National Development and Reform Commission (NDRC), has decided to fine Qualcomm a record $1 billion, as well as force the company to cut its licensing prices in China by a third.
"The NDRC will soon release a new antitrust settlement," Xu Kunlin, the head of the agency's antitrust division, said at a law conference on Monday. "Qualcomm will be fined several times the total amount the NDRC fined last year."
Last year, Qualcomm earned about $13 billion in revenue in China alone, with a big chunk of profits coming from its licensing arm. Since the company entered the antitrust dispute with the Chinese government, it has started making a variety of investments in Chinese companies as a way to show the government that it is committed to doing business in China.
Qualcomm partnered with Semiconductor Manufacturing International Corp, a large chip maker in China, to manufacture its chips, and it also invested $150 million in Chinese startups that develop mobile technologies for Internet, e-commerce, semiconductors, education and health.
Although the NDRC started investigating multiple foreign companies for anti-competitive issues since it got its new leader, Xu Kunlin, last year, the agency stated that it's not actually targeting foreign companies.
Now that Qualcomm has been fined by the Chinese government, the chances that the EU Commission will also fine the company have increased. The EU Commission will at the very least want lower licensing prices for fear that the Chinese businesses would become more competitive than the European ones.
These antitrust fines come at a relatively bad time for Qualcomm, when it has already lost a major customer in Samsung, at least for the Galaxy S6 device. Samsung, as well as other OEMs, will likely continue to turn to Qualcomm for the majority of its devices for the time being, so the company's revenues shouldn't be disrupted too much this year.