Qualcomm in Hot Water? May Face EU Antitrust Regulator - Analyst Blog


Qualcomm Inc. ( QCOM ), globally the largest mobile chip manufacturer, is facing one after one allegation for abusing its market dominance which resulting in monopolistic practice.

Recently, Reuters reported that the mobile baseband semiconductor behemoth is likely to face a European Union (EU) regulatory investigation linked to a four-year old complaint. Qualcomm currently carries a Zacks Rank #3 (Hold).

In Jun 2010, British mobile chip developer Icera accused Qualcomm of using patent-related incentives and exclusionary pricing of chipsets for capturing Icera's business by unfair means.

In the meantime, Icera was acquired by NVIDIA Corp. ( NVDA ), a close competitor of Qualcomm in 2011. Reuters also reported though unconfirmed, Qualcomm may face a fine to the tune up to $2.5 billion if found guilty.  

The EU competition authority at times takes several years to open an investigation. In Jun 2014, Intel Corp. ( INTC ), the global leader in the overall semiconductor market, was fined a substantial $1.45 billion for abusing its dominant market position.

Earlier in 2010, Qualcomm enjoyed a major reprieve by the EU regulator as Texas Instruments Inc. ( TXN ) and Ericsson A.B. withdrew their litigations against the company.

Meanwhile, Qualcomm is currently in deep trouble in China. In Nov 2013, the Chinese regulatory authority, National Development and Reform Commission (NDRC), initiated a probe on the company related to its monopolistic practice.

A state-run Chinese news paper stated that the NDRC has determined that Qualcomm is exercising monopolistic power in the country and may need to pay $1.2 billion or more in fine. More importantly, the company might also have to forego royalties of TDD-LTE as a settlement. Such unfavorable actions will severely impair Qualcomm's patent portfolio.

In 2009, South Korean regulatory authority, the Fair Trade Commission, imposed a $269 million fine on Qualcomm for adopting unfair means to expand its CDMA modem chipset business in that country. Large mobile device manufacturers such as, Samsung and LG Electronics were using those chipsets.

Additionally, Qualcomm is facing two patent litigation cases from ParkerVision Inc. In 2011, ParkerVision claimed that Qualcomm had violated its patents associated with the conversion mechanism of electromagnetic signals from higher frequencies to lower frequencies. 

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: EU , QCOM , INTC , TXN , NVDA



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