Qualcomm under Anti-monopoly Probe in China
    2014-02-10 16:10:12     CCTV.com      Web Editor: Jiang
The US-based smartphone chip manufacturer Qualcomm Inc. is under an anti-monopoly investigation from China's National Development and Reform Commission (NDRC), the country's top economic planner, casting a shadow on the company's performance in a country contributing half of its revenue.

The US-based smartphone chip manufacturer Qualcomm Inc. is under an anti-monopoly investigation from China's National Development and Reform Commission (NDRC), the country's top economic planner, casting a shadow on the company's performance in a country contributing half of its revenue.

Founded in 1985, Qualcomm was known for inventing a digital wireless technology named Code Division Multiple Access (CDMA). The technology later became the core part of some mainstream third generation (3G) telecommunications standards.

Chinese mobile phone vendors have long been complaining that Qualcomm owns too high a market share in the country's smartphone chip market. The company reported 12.3 billion U.S. dollars in revenue from China in the fiscal year 2013, equal to 49 percent of its total revenue.

A recent investigation by the Mobile China Alliance under the China Communications Industry Association shows that Qualcomm has long been overcharging patent fee and and conducting tied sales, which exerted negative impact on the Chinese mobile phone industry.

"For example, a Chinese company may earn several yuan by producing a DVD, but overseas patent owners can earn five U.S. dollars or even more patent fee. As a consequence, China's whole industry will be reduced to a manufacturing industry with all the profits going to overseas companies,"said Wang Yanhui, secretary general of the alliance.

Qualcomm's business in China falls into two parts -- mobile phone chipset production and patent licensing. Mobile phone enterprises can use the chip only after they buy the patent license.

"Qualcomm thinks that you will definitely use the technology when you are using its chips, so it has to authorize the use of those technologies. This has been its business model all the time," said Liu Yubo, vice president of an intellectual property management company in the southern Chinese city of Shenzhen.

Meanwhile, noting that Qualcomm has a dominating and incomparable position in the global smartphone chip market, Ni Guangnan, an academician of the Chinese Academy of Engineering, said Qualcomm's business model would also harm the interests of customers.

"For customers, they pay for what they're given. Manufacturers pay a patent fee of up to five percent of the mobile phone set to Qualcomm, but the fee will finally fall on customers," Ni said.

The commission is still investigating the case.

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