Chip maker Qualcomm has been fined 6.088 billion yuan ($975 million) by the Chinese government after it was decided the company had violated anti-monopoly laws. Regulators from the country's National Development and Reform Commission reached the decision to fine the American chip maker after more than a year of investigation. Qualcomm says it will not dispute the huge fine.
The result of the inquiry means the company has to part with almost a billion dollars, but it lets it keep its basic business model intact — with some concessions. Qualcomm makes the majority of its profit from licensing patents for chips to other companies. Under its previous operating procedures, Qualcomm would bundle a range of patents together, forcing companies interested in obtaining licenses to use 3G and 4G smartphone chips to also purchase other patents from the company's stables. Now Chinese regulations force the company to offer those 3G and 4G chip licenses without the costly extras. The company will also now adopt a licensing rate in line with royalty rates for the rest of the world.
Qualcomm draws half of its revenue from the Chinese market
Steve Mollenkopf, Qualcomm's CEO, said the chip maker was actually "better-positioned as a company in China as a result" of the inquiry, as the decision "removed the uncertainty" under which Qualcomm has been operating for the past year. Bloomberg says shares in the company, which had remained fairly static for the past 12 months, rose 3.1 percent on the news of the fine.
The result is a positive for Qualcomm, which draws half of its $26.5 billion revenue from the Chinese market, but it could also show other foreign companies facing regulatory pressures in the market how their own inquiries are likely to proceed. Microsoft, which had four Chinese offices raided in June last year, is facing its own anti-monopoly inquiry as the Chinese government appears to be making moves to secure the success of home-grown firms.