Qualcomm fined CNY 6.1 bln in China competition case

Nieuws Mobiel China 9 FEB 2015
Qualcomm fined CNY 6.1 bln in China competition case

Qualcomm has agreed to pay a fine of CNY 6.088 billion (USD 975 million) in order to put an end to a competition investigation in China. The US-based company confirmed that it had reached a resolution with China's National Development and Reform Commission (NDRC) regarding the NDRC's investigation of Qualcomm under China's Anti-Monopoly Law (AML). Qualcomm will not appeal the decision that it violated the AML and agreed to pay the fine as well as implement changes in its business practices in China.

Under the terms of the agreed plan, Qualcomm will offer licenses to its current 3G and 4G essential Chinese patents and it will provide patent lists during the negotiation process. If Qualcomm seeks a cross license from a Chinese licensee as part of such offer, it will negotiate with the licensee in good faith and provide fair consideration for such rights.

For licenses of Qualcomm's 3G and 4G essential Chinese patents for branded devices sold for use in China, Qualcomm will charge royalties of 5 percent for 3G devices and 3.5 percent for 4G devices that do not implement CDMA or WCDMA, in each case using a royalty base of 65 percent of the net selling price of the device. Qualcomm will give its existing licensees an opportunity to elect to take the new terms of sales of branded devices for use in China as of 1 January.

In addition, Qualcomm will not condition the sale of baseband chips on the chip customer signing a license agreement with terms that the NDRC found to be unreasonable or on the chip customer not challenging unreasonable terms in its license agreement. However, this does not require Qualcomm to sell chips to any entity that is not a Qualcomm licensee, and does not apply to a chip customer that refuses to reports its sales of licensed devices as required by its patent license agreement.

Qualcomm also updatded its financial guidance for the fiscal year ending 27 September. Revenues are now estimated to be USD 26.3-28.0 billion compared to prior guidance of USD 26.0-28.0 billion. Earnings per share are projected to be USD 3.56-3.76 (which includes an approximately USD 975 million charge, or USD 0.58 per share, related to the fine imposed by the NDRC), down from prior guidance of USD 4.04-4.34. Non-GAAP diluted EPS is estimated to be USD 4.85-5.05 (which excludes the charge from the fine imposed by the NDRC), compared to prior guidance of USD 4.75-5.05.

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Mobiel

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Qualcomm

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China

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Semiconductors, Financial figures, Regulations, Wireless, Wholesale, Licences & sales agreement, Legislation - Lawsuits

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